Goldman Sachs Finds It Slow Going in India

In India, economic expansion drove mergers and stock offerings to records last year. For Goldman Sachs (GS), which is ramping up to take advantage of the boom, progress can be slow and profit from deals elusive.

Chief Executive Officer Lloyd C. Blankfein has said that Goldman wants "to be Goldman Sachs in more places." That hasn't been easy in India. The firm doesn't have licenses needed to trade currencies and underwrite government bonds. Companies in India are reluctant to pay for advice on mergers. Banks accept tiny fees for taking state enterprises public because they want to build goodwill with the government and advance in deal rankings. Goldman's first share sale in the country this year may be a $1.3 billion offering from state-owned Power Finance, expected in May, for which it will split a token fee of 1 rupee (2¢) with three other banks, according to two people with knowledge of the matter. The bank also agreed in the past year to manage a share sale for state-owned Power Grid Corp. of India for about 4¢ in fees. "It's a hugely competitive market," says Manisha Girotra, CEO of UBS's (UBS) India operations. "Everyone is here because the promise is huge."