Goldman Sachs Group Inc. and China Investment Corp. are partnering on a multibillion-dollar fund to help the giant Chinese sovereign-wealth fund invest in US manufacturing and other sectors, according to people familiar with the matter, the Wall Street Journal reports.
The fund is targeting as much as US$5 billion and is a co-investment partnership between Goldman and CIC, which plan to announce their venture jointly this week during US President Donald Trump’s visit to Beijing, these people said. How much capital Goldman and CIC will each contribute to the fund is still being worked out, one of the people said.
If completed, the deal is one of a number of agreements US and Chinese businesses are expected to announce on Thursday in a ceremony presided over by Trump and Chinese President Xi Jinping in Beijing’s Great Hall of the People.
For China’s sovereign-wealth fund, the tie-up with Goldman will help it expand its US investments to include more than publicly traded securities, real estate and private equity assets.
With more than US$200 billion in foreign assets, CIC is casting an eager eye at US high-tech manufacturing, highways, rail lines and other projects, looking to generate steady, long-term returns for the fund and acquire the technological know-how to help upgrade China’s industrial base. In return, CIC officials have also said the fund can serve as a stable source of long-term capital for US projects.
CIC has complained about what it says is an unfair review process by the Committee on Foreign Investment in the US and called on US authorities to improve the transparency of the reviews. In an interview with The Wall Street Journal in May, CIC president Tu Guangshao said “there is potential” for investments by both countries in each other.
By collaborating with a top Wall Street firm, CIC is seeking to diminish the chances its investments will be blocked, one of the people familiar with the matter said. CIC went to Goldman with the idea for the fund, a second person said.
For Goldman, the deal confers prestige and signifies the firm’s position in an initiative that is seen to be of strategic importance by both nations.
It may also better position the New York investment bank if Chinese authorities decide to grant foreign firms greater access to China’s financial sector, which is dominated by state-owned banks.
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