Goldman Sachs Group Inc. plans to expand its credit business in India and sees a growing opportunity to target the nation’s wealthy diaspora as global investors shift their focus from China to what is now the world’s fastest-growing largest economy.
The investment bank wants to broaden the range of loans it offers through its shadow banking unit, according to Sonjoy Chatterjee, president and CEO of Goldman in India. The firm also plans to obtain a license to expand into foreign exchange trading, which would allow Goldman to deal with any counterparty such as financial investors, equity clients or corporate clients, he said in an interview.
Goldman joins Wall Street lenders and private equity giants chasing opportunities in an economy that is expected to grow 7% in the year ending in March. India is already home to the New York-based firm’s largest overseas office, housing thousands of workers from quants to software engineers. Goldman tops the league table for Saudi deals this year, according to data compiled by Bloomberg.
“Indian markets have benefited from the emerging market equity flows that have shifted from China, although obviously the China story is not going away,” Chatterjee said.
Credit Push
He said the credit expansion through the firm’s non-banking finance company exceeds a private credit fund that Goldman managed through its own balance sheet in the South Asian country. Most NBFCs, often called shadow banks in India, can make loans but not accept deposits.
“This will be more than what we might want to originate and unionize, keeping only a residual portion,” he said.
The Reserve Bank of India last year allowed stand-alone primary dealers, which underwrite major issues of government bonds, to offer all foreign exchange products to users. The move was made with a view to strengthening the role of independent traders as market makers, as well as banks operating main traders, the central bank said in a statement.
The country had seven independent primary dealers as of 2020, including Goldman Sachs (India) Capital Markets Pvt., PNB Gilts Ltd., and Morgan Stanley India Primary Dealer Pvt. PNB Gilts said in its annual report earlier this year that it has received the license to operate in the FX market.
“We could not trade the currency in India because we are not a bank,” Chatterjee said. “So that’s another area we want to expand on.”
In wealth management, many Indian entrepreneurs have moved abroad during the pandemic, which has created a “more prominent” opportunity to serve such clients from offices in Singapore, London and Dubai, he said.
Private Equity
Chatterjee, who joined Goldman Sachs as a partner in 2010 after spending 16 years at India’s ICICI Bank, said private equity firms are looking to deploy a large proportion of the capital they have raised for Asian funds in India. That in turn is likely to encourage agreement in the country in the future.
“Private capital continues to remain very hungry to invest,” he said. “When you have a large Asia fund of $8-10 billion, India is the most obvious target.”
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Published: 19 Dec 2023, 07:43 IST
(tagsTo Translate)Goldman Sachs