- Goldman Sachs used a $2.5 billion private equity fund, established in collaboration with China’s sovereign wealth fund China Investment Corporation (CIC), to acquire various U.S. and U.K. companies.
- While the bank previously disclosed these investments, it did not reveal that the capital was at least partially sourced from the Chinese fund.
The Symbiotic Relationship: Goldman Sachs & China Investment Corporation
In a fascinating unfolding of international capital flow, Goldman Sachs has executed a string of seven acquisitions in the U.S. and U.K., employing funds from a $2.5 billion private equity “partnership fund” set up in 2017 with China’s sovereign wealth fund, China Investment Corporation (CIC). This intricate financing structure was confirmed by insiders familiar with the fund’s operations.
A Portfolio Reflecting Tech and Beyond
The acquisitions are not merely diverse but also cutting-edge. They include a start-up specializing in global supply chain tracking, a consultancy firm focusing on cloud computing, a pharmaceutical testing entity, and a manufacturer dedicated to systems pivotal for artificial intelligence, drones, and electric vehicle batteries.
Understanding Private Equity Funds as Strategic Vehicles
Private equity funds often serve as potent instruments for sovereign wealth funds aiming to acquire diversified company holdings. This unique arrangement between Goldman Sachs and CIC has its roots in the Trump era, circa 2017. At the inception of this partnership, Goldman Sachs declared CIC to be an “anchor investor,” not just a passive capital source but an active collaborator aimed at assisting these acquired companies in expanding their Chinese market footprint.
In an official statement, Goldman Sachs clarified that the
“co-operation fund is a U.S. fund managed by a U.S. manager”
and asserted its strict compliance with
“all laws and regulations.”
The fund, according to Goldman Sachs, continues to strategically invest in U.S. and global companies to escalate their market presence in China.
CIC, on its part, has maintained an array of investments in companies such as Cprime, Parexel, Project44, Aptos, Visual Comfort & Co, and Boyd Corporation. The bank’s Chief Executive, David Solomon, held a high-level meeting with CIC’s executive Vice-President Qi Bin and Chair Peng Chun as recently as March, signaling an ongoing and potentially intensifying partnership.
The case here exemplifies how global financial institutions like Goldman Sachs are intricately leveraging sovereign wealth funds, such as China’s CIC, to facilitate cross-border acquisitions while adhering to the governance frameworks of the jurisdictions they operate within.