INDIA BUSINESS WORLD - JUNE 2006
THE MONTH THAT WAS...

GOLDMAN SACHS SET TO PICK UP 10% IN NCDEX

SOME of the most formidable names in Wall Street have woken up to the wonderworld of Indian commodities. Goldman Sachs — the world's leading investment banker and the biggest securities house, has bid for a minority equity stake in National Commodity & Derivatives Exchange (NCDEX), the commodity futures bourse.

Goldman is likely to buy close to 10% equity from ICICI Bank — one of the promoters of Ncdex. Negotiations between the US bank and ICICI Bank are currently underway, sources familiar with the talks told ET. The development is taking place less than six months after Fidelity International, a foreign institutional investor, acquired 9% stake in Multi Commodity Exchange of India Ltd (MCX) for Rs 216 crore. Promoted by Financial Technologies ( India ) Ltd, MCX has the biggest daily volume in commodity futures. The Fidelity group, which is the biggest fund house, has also floated mutual funds in India .

For Goldman — one of the biggest traders in commodity futures — the investment in Ncdex is likely to be ‘strategic' in nature and the fund inflow will be categorised as foreign direct investment. As an investor, Goldman will bring in its experience in commodity markets across the world, which could be invaluable for NCDEX. The proposed move would also mark a comeback for Goldman. After more than a decade, the US bank parted ways with the Kotak Mahindra group this.

Even as the local financial services group bought out Goldman in the investment bank and brokerage JVs, Goldman had hinted that it's charting its own course in India, and may look at avenues like investment banking, broking, real estate, private equity and asset management.

The proposed interest in a commodity exchange is perhaps unexpected. But, it's a pointer to an emerging opportunity. In recent times, no other market in India has witnessed a growth as dramatic as commodities.