Goldman Sachs on lookout for promising Japanese startups
Wall Street powerhouse plans $875m investment in Japan over 2 years
TOKYO -- Goldman Sachs Group is ramping up its corporate investment in Japan and elsewhere, looking to reignite its business growth by diversifying revenue sources.
The U.S. financial giant is ready to spend 100 billion yen ($876 million) or more in Japan over the coming year or two, using its own funds and money from external investors.
Goldman Sachs announced Tuesday that it will invest 2 billion yen in Sansan, which offers business-card management services. The Tokyo-based company's mobile app, the Eight, has more than 1.8 million users in Japan. Sansan plans to launch overseas operations in India first, and then expand to Indonesia and other parts of Southeast Asia.
Goldman Sachs will aid this international expansion and help raise the Japanese company's corporate value, with an eye toward earning investment returns when Sansan goes public down the road.
Getting back into the game
"We will invest in promising startups and support their long-term growth," Masanori Mochida, president of Goldman Sachs Japan, said in a recent interview with The Nikkei.
In Japan, Goldman Sachs will focus on investment in startups for the time being. It will help them grow by working with their management teams to home in on business strategies and assist them in fundraising and business acquisitions.
"We have ample track records," Mochida said, pointing to investments in the 2000s in Sanyo Electric, Universal Studios Japan and others. Prior to the 2008 financial crisis, Goldman Sachs had poured around 550 billion yen into such investments and generated returns exceeding double that amount, he noted.
As U.S. authorities tightened financial regulations following the crisis, Goldman Sachs limited its Japanese corporate investments to just a handful of fields such as renewable energy.
But now, the firm will go on the offensive again in Japan and beyond as more investment opportunities turn up. Existing operations like merger and acquisition advisory and stock underwriting are doing well, but Goldman Sachs will aim for further growth, Mochida stated.
Going on the offensive
Tighter rules introduced after the financial crisis remain in the U.S., but the regulatory environment, such as the authorities' attitudes toward financial institutions, is becoming more conducive for investments under the current administration of President Donald Trump, he added.
Goldman Sachs set up a $7 billion fund this year by collecting money from institutional investors. It will use its own money for small investments in companies but will tap that fund for large deals.
Bond trading, a strength of Goldman Sachs, has been struggling in the prolonged ultra-low interest rate environment. As pressure from shareholders grows, the investment bank said in September it will increase operating revenue by $5 billion over the next three years. Active corporate investment is in sync with this broader growth strategy.
Aside from investing in Japanese startups, Goldman Sachs will engage in overseas business acquisitions with Japanese companies. "We get requests for joint investments when Japanese companies seek to buy businesses abroad," Mochida said. We will be flexible in collaboration." Talks are already underway with several companies.