Raj and Rajat’s Fancy South Asia Hedge Fund

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A month before joining Goldman’s board, Rajat Gupta began marketing a $2 billion hybrid private-equity and hedge fund vehicle called Taj Capital Partners with one of Goldman's biggest hedge fund clients, Raj Rajaratnam.

According to the fund’s marketing documents, obtained by DealBreaker from an investor, most of the $1 billion allocated to the hedge fund portion of Taj Capital went straight into Galleon funds. (And most of it remained there until Galleon was liquidated last October, according to the investor.) The other $1 billion went into private equity investments mainly in India.

Taj Capital targeted annual returns of 25 percent and made most of its investments in the Indian subcontinent. The four founding partners, including Raj and Rajat, said they were putting $200 million of their own cash into the new fund. The other partners in Taj Capital were Parag Saxena, a former head of Invesco Private Capital, and Mark Schwartz, former head of Goldman Sachs Asia.

As reported yesterday, Gupta is being examined in the wide-ranging Galleon insider trading case. Today, we learn Gupta told Goldman he wouldn't stand for re-election as a director after receiving notice from prosecutors that they were looking at recorded conversations he had with Raj. Prosecutors are also looking into trades Galleon made in Goldman shares at the height of the financial crisis.

Gupta, who also sits on the boards of AMR Corp. and Procter & Gamble, hasn’t been charged with any crimes.

Raj has since severed his ties with Taj Capital, which is now called New Silk Route and manages about $1.4 billion in private-equity investments.

Taj Capital Partners

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