By Jack Farchy in London

Goldman Sachs has more than quadrupled its stake in the London Metal Exchange in the past two years, making the US investment bank the biggest potential winner from the proposed sale of the 130-year-old exchange.

The LME, the centre for global metals trading, said last week it had been approached by more than 10 suitors over a sale that shareholders hope will value it at more than ?1bn.

That would give the shares a value of about ?77.50 each, 15 times the last traded price, putting Goldman and other shareholders in line for a large windfall.

Ownership of the exchange, which houses the last open outcry trading pit in Europe, is restricted to its 94 members and shares rarely come on the market. The most recent trade in shares was the sale of the shareholding of Lehman Brothers? European arm, which Goldman bought in July, according to people familiar with the situation. Since August 2009 it has raised its stake from 300,000 shares to 1.23m.

The buying spree has made the bank the LME?s largest shareholder with a stake of 9.5 per cent, potentially worth as much as ?95m ($150m).

The prospective sale of the LME will be a central topic at the main annual gathering of the metals industry, LME week, which begins today in London.

The idea of a sale has divided the LME?s members, with some reluctant to give up control of the exchange while others are keen to profit from their shareholdings. Likely bidders include CME Group, the US exchange, SGX, the Singapore exchange, and IntercontinentalExchange (ICE), according to people familiar with the situation.

Goldman, which has the leading commodities business by revenues among investment banks, is an active participant in the market. The head of its metals trading business, Stephen Branton-Speak, is a member of the LME?s board.

A person close to Goldman said its LME shareholding was managed separately from its trading operations.

The second-largest shareholder with a 9.4 per cent stake is the family of Raj Bagri, the former chairman of the LME, through its ownership of metals brokerage Metdist. Other top shareholders include JPMorgan, MF Global and UBS.

? The Financial Times Limited 2011