{"id":7450,"date":"2019-03-29T16:38:51","date_gmt":"2019-03-29T16:38:51","guid":{"rendered":"https:\/\/www.bdapartners.com\/?post_type=bdanews&p=7450"},"modified":"2019-08-05T12:18:46","modified_gmt":"2019-08-05T12:18:46","slug":"bdas-euan-rellie-speaks-to-reuters-about-chinese-acquisition-of-us-firm-amid-trade-tensions-between-the-two-countries","status":"publish","type":"bdanews","link":"https:\/\/www.bdapartners.com\/zh-hans\/bdanews\/bdas-euan-rellie-speaks-to-reuters-about-chinese-acquisition-of-us-firm-amid-trade-tensions-between-the-two-countries\/","title":{"rendered":"BDA’s Euan Rellie speaks to Reuters about Chinese acquisition of US firm amid trade tensions between the two countries"},"content":{"rendered":"

Reuters<\/a>
\n<\/strong><\/p>\n

Goldman’s China-backed fund bucks trade tensions to buy U.S firm
\n<\/strong><\/h2>\n

By Harry Brumpton, Echo Wang, Liana B. Baker<\/p>\n

Goldman Sachs Group Inc invested money from China\u2019s sovereign wealth fund in a California-based industrial company and is looking for more U.S. deals, three sources familiar with the matter said, even after increased scrutiny from Washington all but stopped U.S.-China deals last year.<\/p>\n

The Wall Street bank is managing a private equity fund called China-U.S. Industrial Cooperation Partnership LP, which it launched with state-owned China Investment Corp (CIC) in November 2017 on the sidelines of U.S. President Donald Trump\u2019s visit to Beijing.<\/p>\n

The fund invested alongside Goldman to buy Boyd Corp, a Pleasanton, California-based manufacturer of rubber seals and gaskets, for $3 billion last September, the sources said.<\/p>\n

Chinese efforts to invest in U.S. companies have been tripped up over the past year by Washington\u2019s concerns the Chinese were gaining control of sensitive technology or companies that played key roles in the economy.<\/p>\n

Reuters reported on Wednesday that the Committee on Foreign Investment in the United States (CFIUS), a U.S. government panel that scrutinizes deals for national security risks, asked the Chinese owner of the dating app Grindr to divest it, spurred on by data privacy concerns.<\/p>\n

Goldman successfully argued to CFIUS, however, that its plan to buy Boyd should be allowed to proceed, the sources said.<\/p>\n

CIC\u2019s novel partnership with Goldman illustrates how China is adapting to U.S. curbs on its deal-making, which resulted in Chinese acquisitions of U.S. companies plunging by 88 percent year-on-year in 2018, according to financial data provider Refinitiv, as trade relations between the world\u2019s two largest economies deteriorated.<\/p>\n

The Cooperation fund was set up expressly to help U.S. companies penetrate the Chinese market. And the fund is touting CIC\u2019s involvement as a strategic advantage in accomplishing this goal.<\/p>\n

In a confidential marketing document prepared for Goldman clients and seen by Reuters, the New York-based bank highlighted CIC\u2019s \u201cefficient sourcing of commercial partners and customers,\u201d promising to \u201cbring new pathways for growth via China.\u201d<\/p>\n

\u201cThe Cooperation fund is a U.S. fund run by a U.S. manager, and is managed to be in compliance with all laws and regulations, including CFIUS,\u201d a Goldman spokeswoman said.<\/p>\n

A spokesman for the U.S. Department of the Treasury, which chairs CFIUS, said the panel does not comment publicly on individual cases.<\/p>\n

CIC did not respond to requests for comment. The sovereign fund said last summer that it planned to press ahead with the Cooperation fund despite U.S.-China trade tensions, but details of its first deal have not been previously reported. The sources asked not to be identified because the Cooperation fund\u2019s details are confidential.<\/p>\n

Anchor Investor<\/h2>\n


\n<\/strong>CIC, whose assets under management are approaching $1 trillion, also has investments in other private equity funds. But CIC does not typically help companies acquired by private equity funds it invests in grow in China.<\/p>\n

CIC also calls itself an \u201canchor investor\u201d in the Cooperation fund, and the sources said it holds a sizeable minority stake that is larger than its typical private equity fund investments.<\/p>\n

\u201cCIC is not involved in the investment management of the fund nor the operation of the fund\u2019s portfolio companies. CIC\u2019s role is to help Goldman Sachs, as the investment manager, identify and pursue opportunities for portfolio companies to do more business in China,\u201d the Goldman spokeswoman said.<\/p>\n

The Cooperation fund, which targets $5 billion in investment capital, plans to execute between one and three deals a year on average, adding up to as many as 12 over the duration of the fund, two of the sources said.<\/p>\n

The fund is the most advanced in a series of similar investments by CIC. In an interview with Chinese state-owned newspaper Securities Times earlier this month, CIC\u2019s president, Tu Guangshao, said bilateral cooperation funds were a strategy to \u201cachieve a more favorable foreign investment regulatory environment\u201d and \u201cremove some barriers in cross-border investment.\u201d<\/p>\n

Tu said CIC has inked a letter of intent for a Britain-China fund, signed a contract for a Japan-China Industrial Cooperation Fund and is \u201cin preparation for\u201d China cooperation funds with Italy and France.<\/p>\n

\u201cWhen you get a couple more cases like this that look successful, other sovereign wealth funds and foreign investors will adopt this model,\u201d said James Lewis, senior vice president at the Center for Strategic and International Studies, a Washington-based think tank.<\/p>\n

About BDA<\/h2>\n


\n<\/strong>BDA Partners is the global investment banking advisor for Asia. We are a premium provider of Asia-related advice to sophisticated clients globally, with over 20 years\u2019 experience advising on cross-border M&A, capital raising, and financial restructuring. We provide global reach with our teams in New York and London, and true regional depth through our seven Asian offices in Mumbai, Singapore, Ho Chi Minh City, Hong Kong, Shanghai, Seoul, and Tokyo. BDA has deep expertise in the Chemicals, Consumer & Retail, Health, Industrials, Services and Technology sectors. We work relentlessly to earn our clients\u2019 trust by delivering insightful advice and outstanding outcomes.<\/p>\n

BDA Partners has strategic partnerships with William Blair, a premier global investment banking business, and with DBJ (Development Bank of Japan), a Japanese Government-owned bank with US$150bn of assets.<\/p>\n

US securities transactions are performed by BDA Partners\u2019 affiliate, BDA Advisors Inc, a broker-dealer registered with the Securities and Exchange Commission (SEC). BDA Advisors Inc is a member of the Financial Industry Regulatory Authority (FINRA) and SIPC. In the UK, BDA Partners is authorised and regulated by the Financial Conduct Authority (FCA). In Hong Kong, BDA Partners (HK) Ltd is licensed and regulated by the Securities & Futures Commission (SFC) to conduct Type 1 and Type 4 regulated activities to professional investors.
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