Clients At The Centre

It’s a story that’s possibly apocryphal, about a man who opened a small office “in a basement next to a coal chute on Pine Street” in Manhattan and figured out how to make money by getting small-time merchants get short-term loans. He conducted his business walking the streets every morning, advancing cash to tanners and jewellers for their daily operations from money he borrowed from banks. He collected payments in the afternoon, including a fee for himself, and repaid the banks.

As the story — narrated in June B. Fisher’s book When Money Was In Fashion — has it, he carried the cash hidden in the band of his tall top hat. That was circa 1869, and the man was Marcus Goldman, founder of Goldman Sachs, patriarch of what is arguably the best known investment banking firm in the world.

Almost a century and a half later, Goldman Sachs is still pulling money out of the proverbial hat, but now its people fly and operate all over the world. Yes, the firm’s reputation took a big hit in the aftermath of the 2008 global credit crisis, but its clients continue to swear by it. “The client is central to our business, be it M&A or equity capital markets,” says Sonjoy Chatterjee, chairman and co-CEO of Goldman Sachs India. “We bring in solutions in difficult situations, using our considerable experience to do it.”

The Bloomberg tables are testimony to Goldman’s ability in the mergers and acquisitions business. This year, until end-November, Goldman has done 15 deals totalling $24.25 billion, including the largest ones by size. The second ranked firm, Citi, was involved in 13 deals totalling $17.5 billion, with an average deal size of $1.3 billion, against Goldman’s $1.8 billion. The two largest deals in the year — both involving Sesa Goa — were shepherded by Goldman.

The firm’s clients are among the world’s largest corporations. “We focus on building long and lasting relationships,” says Chatterjee. “It is not just about the current transaction, but about how the relationship has progressed; that is the true measure of our success.”

But in India, it is not always the biggest and best names in mature businesses that the firm is looking at. “If you look at the biggest companies by market cap today, they are very different from the companies 10 years ago, which again are different from the mid-1990s,” says Chatterjee. “There is a lot of churn in a growing and evolving economy like India. So if we have to build a successful pan India franchise we have to seek out and partner emerging leaders across sectors.”

So if size is not a consideration in India, it means looking at emerging leaders in businesses such as agriculture, media and those that are Internet-related. His firm plans to track the right leaders, build relationships and grow with them.

What will the coming years for Goldman in India look like? Chatterjee says the US will continue to be the main source of strategic partnerships for Indian businesses going global. So will Japan, which is evaluating opportunities in India closely, and will be an important global partner. “We have enormous franchise in both these markets and are well positioned to drive these dialogues,” he says. Don’t be surprised if you are reading about Goldman Sachs in these pages again, this time next year.

(This story was published in Businessworld Issue Dated 24-12-2012)