Liquidity is the ‘biggest theme’: Goldman Sachs India CEO Sonjoy Chatterjee tells clients

By Baiju Kalesh and Anto Antony

Goldman Sachs Group Inc. is telling clients in India to fortify their balance sheets to prepare for the uncertainty brought by the coronavirus pandemic.

“Currently, liquidity is the biggest theme among Indian businesses, and we are advising our clients to raise capital,” Sonjoy Chatterjee, the bank’s chairman and chief executive officer for India, said in a phone interview.

The Wall Street bank has arranged some of India’s biggest equity offerings this year, according to data compiled by Bloomberg. The share sales include telecommunications carrier Bharti Airtel Ltd as well as lender Kotak Mahindra Ltd, controlled by Asia’s richest banker Uday Kotak.

Some of those funds will be needed to outlast the inevitable downturn. The International Monetary Fund is forecasting that India’s economy will contract by 4.5% in the fiscal year through March 2021 as one of the world’s biggest and strictest lockdowns from the end of March takes its toll.

The longer-term question is how companies should think about investing for growth when it returns.

The impact of the pandemic is pressuring India’s sprawling corporates to refine their priorities, Chatterjee said.

“Covid-19 is driving Indian conglomerate structures to optimize and monetize by identifying what is core and non-core,” he said.

In that light, Mukesh Ambani’s campaign to transform Reliance Industries Ltd into a dominant player in e-commerce, with technical expertise from Facebook Inc and $15.2 billion in external funding, arguably looks like the future.

“The biggest challenge is capital allocation, and hence, more than before, they may be willing to unlock value through partnerships,” he said.

The string of deals tied up by Ambani to sell stakes in Reliance’s digital unit accounts for almost 50% of global investments into telecom companies this year, according to data compiled by Bloomberg.

Private equity funds and strategic investors are keen to buy into India, specifically in sectors including consumer and technology, Chatterjee said.

A long-term shift is underway in the country toward emerging dominant “omnichannel” digital platforms, driving digital transactions and shifting consumer buying behaviour online, he said.

“To emerge as the victor, technology companies will push to consolidate,” he said.