While the broader market for India's participatory notes (P-notes) continues its steady decline, US investment banking giant Goldman Sachs appears to be bucking the trend with its PN business in the country thriving. People with direct knowledge of the matter told Moneycontrol that the firm is actively bringing in a significant number of financial institutions from oversees who are keen to access the Indian market but aren’t decided yet on registering with authorities.
In 2025 alone, Goldman Sachs has executed at least 15 separate share purchases on behalf of its P-note clients, including investments in prominent companies such as Eternal, Paytm and Bharti Airtel, a trend that is in stark contrast to the overall P-note landscape.
The P-note industry has shrunk considerably this year, representing a mere 1.63% of total Foreign Portfolio Investor (FPI) assets as of April 2025, down from 2.2% in April 2024. This marks a dramatic shift from half a decade ago, when P-notes accounted for nearly half of all FPI investments in India.
P-notes are financial instruments issued by registered FPIs to overseas investors. They allow foreign investors to gain exposure to Indian stock markets without directly registering with the Securities and Exchange Board of India (Sebi).
Goldman Sachs declined to comment on the matter.
“Goldman Sachs is a strong player in the investment banking space, and they frequently handle many large institutional placements, and these issuances are even pitched to the potential p-note subscribers,” said a global custodian on condition of anonymity. “Global family offices, ultra-wealthy individuals and boutique funds don’t make concentrated investments in a single country and hence it doesn’t make sense for them to take FPI license just for one or two trades.”
In May this year, Goldman had purchased Rs 120 crore worth shares in Eternal for its p-note clients followed by a Rs 307 crore purchase in Paytm, Trendlyne data showed. In July, Goldman also bought Rs 70 crore worth shares in Varun Beverages for p-notes, data showed. Bharti Airtel, ICICI Bank and HDFC Bank are the other companies where Goldman’s P-note clients have invested in the month of July, data showed.
Other popular P-note issuers have not participated in any major transactions in the last few months, Trendlyne data showed. BofA Securities Europe - an investment arm owned by Bank of America - has undertaken only two transactions in the year for P-notes - a Rs 250 crore purchase in Bajaj Finserv in June and a Rs 16 crore purchase in Samhi Hotels in April. The database didn’t show any recent transactions done by the P-note arms of others including Citicorp, CLSA and Credit Suisse.
To be sure, companies only disclose data of shareholders who own more than 1% in the company and in case of big-ticket purchases, the data is captured under bulk deals. Moneycontrol could not ascertain if these firms had made any smaller purchases in the market through P-notes.
“The entities who use the P-note route are usually the entities who wouldn’t be eligible for the coveted category I FPI license under Sebi rules which are based on risk profile of the investor. Hence, they face more stringent Know Your Costumer (KYC) norms. P-notes offers them a simple and easy route to invest in India,” said a person cited above.
The steady erosion of P-notes' popularity can be attributed to a series of regulatory interventions. In 2017, just before market regulator Sebi prohibited P-notes from making unhedged derivative market bets, they constituted 5% of total FPI assets. This figure steadily declined to 2-3% by 2024, highlighting the impact of stricter oversight on these once-favoured investment vehicles. Goldman Sachs's ability to maintain and even grow its P-note clientele in this challenging environment underscores its somewhat unique approach to attracting high-net-worth investors to India.
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