With ICICI share sale mandate, Goldman gains traction in India

With ICICI share sale mandate, Goldman gains traction in India
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First Published: Fri, May 11 2007. 11 00 PM IST
Updated: Fri, May 11 2007. 11 00 PM IST
M.C. Govardhana Rangan/Reuters
Mumbai: A year ago, Goldman Sachs’ presence in India consisted of one man in a hotel room.
Now, the Wall Street powerhouse’s March 2006 move to split from its local joint venture (JV) and go it alone in India is starting to pay off, with Goldman winning a coveted mandate to underwrite a $5 billion (Rs20,500 crore) share sale by ICICI Bank Ltd.
Goldman was also one of the sponsors of this week’s $275 million global depositary receipt sale by Indiabulls Financial Services.
Rival bankers in the fast-growing, but notoriously low-margin, market scoff that fees on the ICICI Bank deal will be less than 1.5%, but all the same, just about every bank was bidding for the offering.
“Post-expenses, it will end up at just 1% or so,” a person familiar with the transaction said.
But even if the deal pays just 1%, a $50 million payday for banks led by Goldman and co-sponsor Merrill Lynch looks attractive, given that ICICI Bank is expected to be a relatively easy sell as investors clamour for exposure to India.
Goldman Sachs spokesman Eddie Naylor declined to comment. At the same time, newcomers such as Lehman Brothers and Credit Suisse have crowded into the market, adding to pressure on the already-thin fee margins.
“Goldman will be aggressive, but I feel there will be enough for everybody,” said an investment banker in Mumbai.
After the split last year, Goldman’s lone banker in India was country head Brooks Entwistle. It now has 75 people in the country and has been ramping up activity after securing licences in late December.
Its plan is to offer a complete range of financial services in India, including asset management. In Goldman’s latest deal, dual-listed ICICI Bank plans to raise $5 billion in a simultaneous share sale in the US and in India.
ICICI Bank is expected to add local banks JM Financial and Enam Financial Consultants Ltd as co-bookrunners on the deal.
Investors, including Singapore state investment agency Temasek and UK fund manager Prudential, are said in the market to be buying more than 10% of the issue.
While the ICICI Bank mandate is a breakthrough for Goldman, the firm is not a complete stranger to India.
It has handled overseas share sales by software firm Infosys Technologies Ltd and represented Hong Kong-based Hutchison Telecommunications International Ltd in the $11 billion sale this year of its Indian cellphone business Hutchison Essar Ltd to Britain’s Vodafone Plc.
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First Published: Fri, May 11 2007. 11 00 PM IST
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