Goldman Sachs, the investment banking giant, is looking to exit some of its private equity investments through secondary deals. Its 5% stake in the National Stock Exchange (NSE), the country's largest bourse, is one of the major investments on the block, sources familiar with the development said.

They said deals done by Goldman's proprietary desk are on the block. "We are reviewing investments as part of normal course of business," a source at the top US investment bank told DNA Money. "Though we are not looking to sell anything at a loss."

Goldman did not respond to an email questionnaire sent by DNA Money.

A top NSE official said he "does not have any knowledge at all (of the Goldman exit)". Goldman Sachs was a relatively late entrant in the Indian private equity scene.

Many of its investments in India are 2-3 years old, such as the one in NSE (made in January 2007), Bharti Infratel (December 2007), TVS logistics (January 2008) and Cremica (August 2006).

Under normal circumstances a private equity investor is expected to stay put for 3-5 years.

But then, these are not normal times. The fall in the value of rupee alone is hurting private equity players big time. To boot, an exit through an IPO seems far away. In January 2007, when Goldman Sachs, along with the New York Stock Exchange, General Atlantic and Hong Kong-based Softbank's Asian Infrstructure Fund had picked up a 20% stake in NSE for $490 million, the rupee was at 44 per dollar.

Today, the investors are taking a 20% hit on currency alone with the rupee at 52 per dollar. Since the IPO scene is challenging and expected to take 2-3 years to come out of the woods, many private equity players are looking to exit their investments through secondary deals, wherein they sell their stake to other private equity players or investors.

Gaurav Deepak, managing director, Avendus Capital, said his company is advising a number of secondary deals for private equity investors. "As the public market has become choppy and exit looks difficult for another 2-3 years, these players are looking for exit through secondary deals," Deepak said.

Investment banks have started working on this since January-February and deals may start getting announced in late March or April, he said. Goldman Sachs has investments in India through both its proprietary desk and its funds.

Analysts said Goldman Sachs' investments through its funds may not directly affect its balance sheet, but those made through its proprietary desk would be, due to which the current review.

After becoming bank holding companies, firms like Goldman Sachs and Morgan Stanley are subject to capital adequacy rules and do not enjoy the elbow room to leverage 30-35 times their capital seen in the pre-Lehman Brothers era.

This deleveraging process has already seen heavy selling across global markets. "All bulge-bracket investment banks such as Bank of America-Merrill Lynch and Goldman Sachs are leveraged extensively and are selling. They don't make any distinction between listed or unlisted investments. Whatever they are able to sell they are selling," said an investment banker who did not wish to be named.

Goldman's funds are also on a selling spree in Indian listed companies' space. According to bulk and block deal data from the exchanges, one of Goldman's investment arms, Goldman Sachs Investment Mauritius Ltd, has sold shares worth Rs 132 crore across 21 companies in the past 5 months.

Adhunik Metaliks (Rs 19.4 crore), Graphite India (Rs 17.2 crore) and Amtek India (Rs 16.34 crore) lead the table in terms of sales value. Goldman also holds a stake in listed entities such as Mahindra & Mahindra, NDTV and SpiceJet.

N Sundaresha Subramanian  DNA