Goldman Sachs Group launches an asset hunt in Asian region
Goldman Sachs Group launches an asset hunt in Asian region
BANGKOK (Reuters): U.S. investment bank Goldman Sachs Group Inc is on a hunt for undervalued and recyclable assets across Asia as it seeks to plant its footprint in the region.
The president and managing director of Goldman Sachs (Asia), Richard Gnodde, said on Friday his team would look at investments in high technology companies, hotels and the financial sector where it thought management could be improved or extra value squeezed out.
But the bank, which went public in a $3.7 billion stock offering in May, is not about to turn itself into an electronics company or start running hotels.
"We are interested in acquiring assets and seeking a good return -- not buying the entity," Gnodde told reporters in Thailand.
"But we can help strengthen the management team. Every investment is different. There are clearly situations where we believe that returns can be improved by helping the management do its job better," he said.
Goldman Sachs has spent huge sums in Asia over the last few years, mostly in long-term investments and often in partnership with other companies with particular expertise.
It has spent around $2 billion in Thailand alone in a range of industries, notably in Thailand's Rajadamri Hotel, which runs Bangkok's five-star Regent Hotel.
With GE Capital, it was also one of the biggest bidders in the public auctions of assets from 56 defunct finance companies after they collapsed during the financial crisis of 1997 and 1998.
Gnodde said the partnership with GE Capital would continue: "It has proven successful and we would hope to extend that partnership in future."
He promised to continue investing in Thailand and the rest of the region if it continued to recover from the recession that was sparked by the devaluation of the Thai baht and other Asian currencies in 1997.
"We are building our franchise. We are building it as fast as it is advisable so to do. We are going to continue to expand our footprint over time," he said.
"The business is to acquire assets and recycle those assets."
Gnodde said Goldman Sachs had a team of 20 professional bankers in Hong Kong looking constantly at investment options across Asia and another team in Japan doing the same.
They would invest where they saw valuable assets, typically in blue chip companies.
"We typically don't expect to sell those assets for five, seven or more years," he said.
Goldman Sachs would look at investing in companies where its experience in enhancing shareholder value would be appreciated.
He said this might mean some family businesses would not welcome the bank's attentions, seeing it as an "asset stripper".
Managements had to be oriented towards maximizing returns for investors, he said. "We don't want to put our money where management are creating value for another purpose."
"You have to run a competitive value-for-money business and we run businesses to maximize value," he said. "If a management wants to run a business in a way opposed to shareholder value, that's up to them. But we would not invest in the company."
He said he had seen no discernible increase in nationalistic hostility to foreign investors in Asia since the region's crisis and said any country that allowed it to restrict foreign investment would suffer.
"Nationalism has a price... Each company, each individual, each country is competing for capital, and capital is going to go where returns are highest."