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- Goldman Sachs executive Ram Sundaram has solidified his position as a senior leader in its mighty markets division.
- Sundaram, who was named the sole head of the currencies and emerging-markets team last month, is also responsible for a structured credit group known for much of its history as Principal Funding and Investments.
- The group has played a part in some of Goldman’s most profitable trades over the past 15 years, trades that led to more than one instance of controversy.
- The elevation of Sundaram — and what some see as his eat-what-you-kill Wall Street mentality — came as somewhat of a surprise to insiders who see Goldman marketing itself as a kinder, gentler investment bank.
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Under CEO David Solomon, Goldman Sachs has marketed itself as a kinder, gentler investment bank — a “holistic” client adviser that served avocado toast at its first-ever investor day.
So it came as somewhat of a surprise to insiders when Ram Sundaram was handed control of Goldman’s currencies and emerging-markets business last month, solidifying his position as a senior leader in Goldman’s mighty markets division, the arm that houses the traders and pulls in $15 billion in annual revenue.
Sundaram, according to some who have worked with him, is a throwback to an eat-what-you-kill era on Wall Street, a brash derivatives expert who decorates his office with a big photograph of a pack of wolves with their eyes trained on a target in the distance. He’s had a leading role over the past 15 years in some of the bank’s most imaginative — and at times controversial — trades.
For much of that time, he’s worked from a secretive but powerful profit center hidden deep within Goldman. Long known as PFI, for Principal Funding and Investments, the unit is well known to Goldman’s top brass and seldom touted. It regularly reaps nine-figure paydays, occasionally angering clients in the process.
Sundaram oversaw the design and structuring of $6 billion in financing for the Malaysian development fund known as 1MDB, four Goldman insiders said. Those deals were later exposed as part of one of the largest financial frauds of all time, though Goldman has repeatedly denied having any knowledge of the bank’s role in the fraud and Sundaram has never been implicated in the scandal.
He was front and center for trades more than a decade ago that have been reported to have pushed the giant insurer AIG toward insolvency during the financial crisis, and he oversaw a deal for the middle-market lender CIT Group that led the Financial Times to cite sources claiming the bank would benefit from the lender’s bankruptcy. Goldman defended the deal, calling the claims “patently wrong.” CIT later transferred hundreds of millions of dollars to Goldman when new management exited the trade.
In 2018, Sundaram helped arrange a financing deal for a Brazilian power plant with similarly lofty profits. In this case, Goldman returned some to the client, according to a person familiar with the transaction. And there was a scuttled financing deal with WeWork last year that would have meant $500 million in fees and warrants for Goldman’s coffers, according to a person familiar with the deal. The two sides didn’t come to an agreement.
“He’s a very focused, capitalistic, commercial animal,” said one Goldman insider, invoking a favorite Goldman descriptor — “commercial” — for someone who’s good at minting money. “He’ll do anything to get a deal done.”
Another person who worked directly with him recently said his hunger for profits could lead him to ignore other risks such as bad press. “He gets blinded by the zeros,” they said.
A Goldman Sachs representative said in a statement:
“Working closely with our investment bankers, Ram and his team have brought their considerable skills to some of our most important clients, recently helping devise financing for great companies like T-Mobile and United Airlines that are navigating a very challenging economic landscape.”
The representative declined to make Sundaram available for an interview.
Business Insider spoke with more than a half-dozen current and former Goldman traders or clients and reviewed public filings and news articles to piece together the details of Sundaram’s career and opinions of his management style.
To those following Goldman Sachs’ public messaging over recent years, Sundaram might seem like an anachronism caught between the sharp-elbowed Goldman of the past and a future where it has signaled it will rely more on steady businesses like consumer banking and asset management.
To some, his continued rise is further evidence that at Goldman, profits still come before everything else.
Sundaram is a product of the prestigious Indian Institute of Technology system who traveled to the US to attend the University of Rochester’s business school. He joined Wall Street and worked his way up at Morgan Stanley before joining Goldman in 2001. He soon began building PFI.
As he built the team, Sundaram encouraged its members to think like marauding buccaneers scouring the seas in search of big scores, according to one former employee. Another said Sundaram viewed the team more like the Navy SEALs and continually pushed its members to focus their time on only the biggest deals.
The group emerged as a sort of gladiator’s ring for financial engineers. Some employees had free rein to be abrasive, while others intentionally riled up colleagues for fun, one person said.
Two partners would have shouting matches, another said. A third added that the culture was allowed to persist because Sundaram showed that he was unwilling to rein it in. The tone has mellowed in recent years as some of the most polarizing figures have been asked to leave or left on their own, two of the people said.
Sundaram is known among some as being an exacting manager, and some employees often get anxious about posting him on a deal because they know he might have questions they can’t answer, one person said. Another said he ran the team like a quiet authoritarian, withholding praise, seemingly to keep junior employees off guard.
As tough as he might be on his underlings to their faces, two sources say he’s aggressive when it comes to seeking recognition — and hefty paydays — for them within the broader bank. One insider who shared a compensation committee with Sundaram marveled at his ability to recall minute details about particular deals to get his people paid. His tendency, in this person’s view, to overstate his case made it a running joke among some colleagues.
“Every person who works for Ram is a superstar, being grossly underpaid, about to leave for a rival,” the person said. “We used to laugh about it.”
He may also have flouted Goldman’s informal culture of reaching consensus, clashing with other partners in the division. He repeatedly went behind the back of Justin Gmelich, a former global credit chief, to sway higher-ups on decisions about where a trade would live or what activities Sundaram could be involved in, according to a person familiar with his actions.
As Sundaram’s power has grown, so has the size of the team. Staffed with mostly men, the team of roughly 30 in New York debates trade ideas in Goldman’s fifth-floor trading space, housed behind glass walls to protect the material nonpublic information it possesses. Smaller outposts exist in London and Hong Kong.
Sundaram’s talents in persuasion, sources say, apparently also extend to his dealings with counterparties, in which he uses his encyclopedic knowledge of deal terms and structures to convince them that lucrative deals for Goldman are also in their best interest.
“He is able to lay out his arguments in a very, very convincing way,” one person said. “He has full command and knowledge of every deal.”
A WeWork deal that didn’t happen
A recent one evinces that persuasiveness, according to people familiar with it. Last summer, Goldman was in talks to lend WeWork as much as $10 billion, according to people with knowledge of the arrangement. Goldman would have gotten as much as $500 million and warrants, one of the people said.
The deal required WeWork to place its most prized assets, including building leases and intellectual property such as the “We” name that cofounder Adam Neumann trademarked and sold back to the company, in a separate legal entity. If WeWork violated the loan terms, Goldman would be able to seize the assets.
Sundaram was the “brains behind it,” though he was cocky and condescending throughout the process, one of the people said. Another person involved in the deal put it differently: “He’s a really sharp structurer. The job of someone like that is to extract as much as they can and give as little as they can.”
Despite reservations among some members of WeWork’s staff, the coworking company was prepared to go forward, two of the people said. In the end, Goldman pulled the plug over the July 4 weekend.
Months later, after WeWork’s initial public offering fell apart, more than two dozen bankers and WeWork executives convened at JPMorgan’s headquarters to sort through the firm’s financing options. Showing up without an invite, Sundaram showed off his combative style, according to someone who was there, and proclaimed that the only viable option was a SoftBank bailout.
The comment caught some in the room off guard, in part because they perceived him as close to SoftBank, one person said. (Goldman has gotten numerous mandates from SoftBank in recent years, including last month’s transaction to sell its stake in T-Mobile, according to reports.)
Such fits of pique have been more common under Goldman’s newest bosses, trading leaders Jim Esposito, Marc Nachmann, and Ashok Varadhan, according to two insiders. One person said it was because the trio was not concerned with trying to massage Sundaram’s ego.
Sundaram, who led Goldman’s early discussions about collecting collateral from AIG, was named partner just one month after AIG’s bailout sent billions of dollars back to Sundaram and his team. The title, Goldman’s highest, affords him a salary of $950,000 and a cut of a special bonus pool.
The AIG trade followed a PFI playbook: Obtain third-party financing and use it to buy up assets, either for itself or on behalf of clients, keeping some or all of the difference between the asset return and the cost of funds. Sundaram likes to reduce the risk by obtaining insurance from another party, according to former employees. 1MDB followed a similar formula.
The deals are particularly profitable because clients are encouraged to work with Goldman on a principal basis, meaning the bank buys the deal or takes on the risk instead of selling it to other investors like a typical bond or equity transaction, according to sources. That can often take the form of a total return swap.
In recent years, the business has played heavily in financing infrastructure projects outside the US, whether it was the Brazilian power plant, toll roads, or a high-speed rail line through the Channel Tunnel linking Britain and France. A strategy coined by Goldman’s former president Gary Cohn and described in “Billion Dollar Whale,” known internally as “monetizing the state,” proved particularly lucrative for Sundaram’s team.
1MDB role is lauded internally
On 1MDB, for example, Goldman earned fees of some $600 million across three deals.
Goldman’s leaders have repeatedly denied having any knowledge of the bank’s role in the fraud and painted it as the work of a few bad actors. Current executives including Solomon and CFO Stephen Scherr ran business units involved in the deals. And so did Sundaram, who is close to Scherr, though his role structuring the deal has not been implicated in the scandal.
Inside the bank, his role has been lauded, according to three sources. In a move seen by some in the company as celebrating of Sundaram and his team, PFI was one of the Goldman units to be awarded the bank’s highest internal honor, the Michael P. Mortara Award, for its work designing the first of the three 1MDB transactions, according to one of the people who said Sundaram’s involvement was well known internally.
The award, honoring the bank’s most innovative transaction, is named for a late partner of the firm who was a key engineer of the mortgage-backed-securities market.
The bank is now in discussions with the Department of Justice, which, The New York Times reported in June, may require the corporate parent to pay a fine of more than $2 billion and plead guilty through a subsidiary in Asia. Goldman set aside an additional $945 million for litigation costs in the second quarter, which analysts attributed to its pending 1MDB settlement. The issue wasn’t mentioned by name on the firm’s earnings call.
What comes next?
Sundaram’s group has also found opportunities in Goldman’s home market. In 2016 and 2018, Sundaram helped Sprint, the US-based cellular network backed by SoftBank, sell its spectrum and lease it back, leading unsecured creditors to complain that it was stripping the company of valuable assets, according to a former employee who said they remembered it being discussed internally.
In May, Goldman staffed up for a wave of US bankruptcies, hiring a pedigreed expert in corporate restructurings, Kurt Hoffman, for the team. Hoffman will be able to arrange expensive loans for distressed companies that can’t get them anywhere else.
And just this month, Sundaram’s team helped United Airlines raise $6.8 billion by pledging its frequent-flyer program, helping the troubled airline with financing even as global travel remains stalled. It also played a large role in structuring a deal to help SoftBank sell its $21 billion T-Mobile stake.
Those kinds of deals are more likely in the coming months as the US economy remains mired in recession. Battered industries from airlines to real estate to retail will need loans. And that, according to sources, is where Sundaram and his team can come in.
As they pitch pivotal and highly profitable transactions, they’ll do so with broad institutional support. Large transactions must go through the proper channels at Goldman, including approval for debt deals from the firm’s capital committee, or the commitments committee for equity transactions, according to a person with knowledge of the policies.
And the CEO’s sign off last month on Sundaram’s added responsibilities, insiders say, shows that Sundaram has support from the firm’s highest levels.
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