Mumbai, March 16: The Kotak Mahindra group and Goldman Sachs, the US-based investment banking and securities firm, are going their separate ways in India.

Kotak Mahindra Bank Ltd (Kotak Bank) today entered into an agreement with Goldman Sachs to purchase its 25 per cent stake each in Kotak Mahindra Capital Company (KMCC) and Kotak Securities for Rs 333 crore.

The buyout is a precursor to Goldman Sachs charting its own course in the country. Goldman Sachs is planning to invest up to $1 billion over the next couple of years in a host of areas that include investment banking, broking, real estate, private equity and asset management.

While Kotak Bank held 75 per cent each in KMCC and Kotak Securities, the buyout will result in the group wholly owning both these subsidiaries.

The Kotak group will be forking out Rs 123 crore for the 25 per cent stake that Goldman Sachs held in Kotak Securities and Rs 210 crore for a similar stake that it held in KMCC ? making for a total payout of Rs 333 crore.

KMCC is the country's leading investment bank. KMCC also has presence in the UK, the US, Mauritius and the UAE through its subsidiaries. Kotak Securities, on the other hand, is a leading stockbroker for both retail and institutional clients.

The Kotak group’s relationship with Goldman Sachs commenced in 1992 and it became an equity joint venture in 1996.

Enumerating the reasons for both the partners deciding to go their separate ways, sources close to the Kotak group said the US partner was deeply interested by the huge growth and opportunity in the country.

At the same time, Uday Kotak, who heads the Kotak Mahindra group, has identified both investment banking and stock broking as key areas of his core business in financial services.

“There was no way in which he (Kotak) would have sold both these core businesses to Goldman. Therefore, both the partners had to terminate the strategic alliance in an amicable manner,” they said.

Yet another factor that led to the split was the Kotak group’s plan in ramping up its overseas operations in the brokerage business.

The group has subsidiaries in London, New York and Dubai and plans to venture into new markets in the Far East.

“The group can now rope in different partners for its foray in separate markets,” sources added.

An indication of Goldman Sachs’s ambitious plan for India was available after Brooks Entwistle, chief executive of Goldman Sachs (India) LLC, said in a statement, “The Indian market represents tremendous growth opportunity,” adding that the group would now look at building an “onshore” presence that is fully integrated with its global businesses.

Describing the transaction as a change of an era, Kotak, who is the executive vice-chairman and managing director of Kotak Bank, said, “With the purchase of the investment banking and securities businesses, the group has taken a significant step towards further integrating financial product offerings for customers. The time has come for us to raise our aspirations and scale as the India story takes the centrestage in the global order. We at Kotak have always aspired to create an Indian financial institution with global class and capabilities. This is a reinforcement of that vision.”