Frydenberg was approached by a private equity firm, a professional services firm and other investment banks. In addition, he was offered non-executive director roles on boards of directors.
In choosing to join Goldman Sachs as a senior adviser, Frydenberg followed in the footsteps of other politicians who made the switch to banking, including Paul Keating, who joined Lazard, and Warwick Smith, who joined Macquarie.
Rothery says Frydenberg’s terms of employment include certain exclusions covering the government, regulators and institutions regulated by them.
“This is not a government role, it has nothing to do with government,” he says.
“He is effectively barred from speaking to anyone in government for 18 months. He will also have no cover from any institutions where he has made appointments, including the RBA, ASIC, the ACCC and the Procurement Panel, all of which excluded
“Josh has been adamant about it, as we would be about how seriously we take conflicts.”
Conflict of interest exclusions and the operating model of investment banking in Australia lead Chanticleer to conclude that Goldman Sachs will be best served by deploying Frydenberg to Asia.
The Asia Pacific role excludes Japan, meaning the focus will be on China, Hong Kong, Singapore, Indonesia and other Southeast Asian countries.
Asia Pacific businessmen and politicians tend to have a much higher level of respect for former politicians from other countries and this should work in Frydenberg’s favour.
Rothery says Frydenberg has “very strong relationships” in Asia that will suit his global role with the bank.
“This is the first senior regional advisory appointment for us in Asia Pacific, and we see it very much as an Asia Pacific platform,” he says.
In Australia, Frydenberg will not be a hands-on M&A deal maker, just as he was not when he worked for Deutsche Bank before entering politics. Frydenberg joined Deutsche after being hired by the then head of investment banking, Hamish Douglass.
A veteran public company chairman says the most useful role for politicians in investment banking is to exploit their relationships. They are not the “rainmakers” of M&A.
“In investment banking, the reality is that five or six guys can do a really good job for you, and you’re trying to decide who can do the outstanding job,” the president says.
“That’s the call you’re making, and the sad reality is that you only find out at the end, don’t you?
“Basically, everyone can do a pretty good job because there are so many good teams with so many good advisors. So when you’re trying to make the board call about who’s going to do the outstanding job, it’s really on the sidelines.
“And so anything you can get on the sidelines is going to be great, so Frydenberg is going to help them on the sidelines.”
Goldman Sachs is the No.1 M&A banker in Australia based on Dealogic’s latest league table, which was updated to include Goldman Sachs as an adviser to Ramsay Health Care on the conditional, non-binding, non-binding indicative proposal of KKR for Ramsay.
The updated data put Goldman Sachs ahead of Barclays (Barrenjoey) and UBS.
Goldman Sachs has a history of appointing former politicians and senior public officials as advisers. Examples include Sir Alex Younger, former head of MI6, Lord Brian Griffiths, Margaret Thatcher’s senior policy adviser, Tito Mboweni, former South African finance minister, Bob Zoellick, former World Bank president and US trade negotiator, Mario Monte, former Italian Prime Minister. , Peter Sutherland, former Attorney General of Ireland and former chairman of BP.
Goldman Sachs’ principal business advisor in Australia is Charles Curran and former Reserve Bank of Australia Governor Ian Macfarlane was an advisor to Goldman Sachs for a decade.