17 Sep - Commercial Awareness - Private Equity
Topic: Goldman assists China in making UK/US investments
Link: https://www.ft.com/content/792fae47-8e2f-4363-99e9-176b33ccc09a?emailId=5a09ff27-f41c-4245-a4fd-b7bc5db76977&segmentId=22011ee7-896a-8c4c-22a0-7603348b7f22
Goldman set up a partnership fund – with money from a Chinese state-backed fund – and invested in UK and US companies in critical sectors.
Sovereign wealth funds face difficulty in investing in critical sectors (eg tech, energy). PE funds like Goldman can help. They build up indirect holdings in companies.
Goldman set up a CIC fund - China-US Industrial Cooperation Fund - aimed to address US’s concerns about China’s investment in the US. CIC was founded in 2007 with $1.3 trillion assets at the end of 2021, half of which are invested in private equity. This is an example of bilateral fund.
Goldman made 4 investments in 2021 and one in 2022, acquired LQRA - an inspection company, and a cyber security group, and invested in Cprime - cloud computing, Paraxel, a drug testing company and many more examples. The investments will help these Western companies to scale in China.
One example of how companies circumvent political pressure. China is able to invest in US and vice versa.
