Mumbai, July 9: In a strong vote of confidence in the long-term strength of the Indian financial markets, Goldman Sachs has stormed in with a whopping 75 per cent stake in Goldman Sachs India, a company set to be formed through the incorporation of Goldman Sachs' India representative office. The venture will concentrate, long term, on the exciting new zone of cross-border M&As, as well as transnational equity flows.The remaining 25 per cent stake will be held by long-time associate entrepreneur Uday S Kotak, who will also chair the company.
Goldman Sachs has also decided to extend its earlier-formed strategic alliance with Uday Kotak's Kotak Mahindra Finance Ltd for a further three years, effectively scotching rumours that the tieup between the Indian financial major and the investment banking giant was not in prime shape.
The US-based firm will hold a controlling 75 per cent stake in the new investment banking outfit, Goldman Sachs India LLC, and the remaining 25 per cent stake will be held byKotak.
Speaking to The Financial Express, Uday Kotak, who will take over as chairman of the new company, said: "Our new joint venture will focus in the long term on advisory services for mergers and acquisitions involving multinationals and Indian companies, besides advising clients on cross-border equity floats." The extension of the strategic alliance will involve co-operation and resource sharing between Goldman Sachs and two companies, Kotak Mahindra Capital Company and Kotak Securities.
"Kotak Mahindra Capital is to be owned 75 per cent by Kotak Mahindra Finance and 25 per cent by Goldman Sachs," says a Kotak Mahindra press release, adding that Kotak Securities is also owned 75 per cent by Uday S Kotak and 25 per cent by Goldman Sachs.
Says Hank Paulson, co-chairman and co-chief executive officer of Goldman Sachs: "We are delighted to extend our joint venture, which despite difficult market conditions in India, has been very successful." Both the strategic partners have been activelyinvolved in the disinvestment of public sector undertakings and have successfully handled cross-border transactions involving PSU giants MTNL and IPCL. The two firms are currently working jointly on the proposed disinvestment programme of Indian Oil Corporation.
The formation of Goldman Sachs India, according to managing director James J C Birch, demonstrates the firms' confidence and commitment to India. "We want to be a long-term player in India, and are bullish about its prospects despite short-term hiccups," he added. The newly floated company will replace the current Goldman Sachs representative office in India.
The US-based firm sees better share appreciation opportunities in Indian corporates than their counterparts in other Asian countries.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
