Goldman Sachs’s China dealmaker stops tapping US investors

The head of Goldman Sachs’s private equity business in Asia has said she has stopped trying to raise money in the US because of geopolitical tensions between Washington and Beijing.

Stephanie Hui, who runs the Asia-Pacific private and growth equity arm of Goldman Sachs Asset Management, with investments that include deals in China, made the comments at a private equity conference in Hong Kong on Tuesday.

“I’ve been asked to do observations of what we’re seeing in the marketplace . . . [one is] the geopolitics,” she said.

“I used to go to the States to fundraise a lot. My friends know that my destination lately is the Middle East. I go to south-east Asia a lot, I go to China a lot, and I go to Korea and Japan.

“Why? Because there’s more interest in this part of the world, particularly in China, from the countries I just listed. I only go to the States to see my boss . . . not for fundraising.”

A spokesperson for the bank said her comments were a reference to wider industry trends.

Hui’s experience is an indication of how North American investors, such as public pension funds, are increasingly wary about deploying money in China at a time when tensions are high and Washington is finalising a new outbound investment-screening mechanism aimed at China.

The Ontario Teachers’ Pension Plan, a Canadian fund, said in January that it had paused direct investment in private assets in China.

Goldman’s asset management arm operates, in effect, as a private equity firm within the bank. It manages global funds raised from international investors that can be deployed around the world, though it has historically generated outsized returns in Asia.

Hui’s comments are more an indication of investor sentiment than a sign that the bank will raise less money in the US, since Goldman’s set-up means Hui’s US colleagues can raise money from American institutions, which is then pooled with money raised in Europe and Asia and invested around the world.

“I grew up doing China investing,” Hui said at the conference run by the Hong Kong Venture Capital and Private Equity Association. When it came to which sectors to invest in, “data analytics and artificial intelligence is definitely where we’re looking”, she said.

Other sectors of interest were healthcare, travel and manufacturing in China, as well as value-for-money retailers, because “there’s a bit of talk about people being more frugal about [their] spending”.

Goldman Sachs Asset Management’s previous investments in China include Alibaba, the education company iTutorGroup and Shanghai-based Zhenge Biotech, according to the data provider PitchBook.

Hui also noted that Chinese investors made up a smaller proportion of the money in private equity funds globally, citing McKinsey figures which showed China represented just 34 per cent of fundraising in Asia in 2022, down from 83 per cent in 2017.