Goldman Sachs In Deal To Buy Out China Joint Venture

Goldman Sachs Group Inc is moving to fully own its Chinese Securities joint venture, multiple reports said, citing an internal memo. The financial services major has signed an agreement to acquire the remaining 49 percent share of Goldman Sachs Gao Hua or GSGH Securities Co. Ltd. JV it doesn’t already own.

The New York-based investment bank has initiated the process with the country’s regulators to lift the stake in the JV from its current 51 percent.

Goldman Sachs’ Hong Kong-based spokesman reportedly confirmed the contents of the memo.

With the full ownership, Goldman Sachs could expand its operations in the multi-trillion-dollar Chinese financial sector. The bank plans to rename the business as Goldman Sachs (China) Securities Co. Ltd.

According to Goldman memo, “One hundred percent ownership of our franchise on the mainland represents a significant commitment to and investment in China, outlined in our China strategic plan. This focuses on growing and strengthening our existing China businesses, expanding our addressable market and investing in talent and technology.”

The bank formed the China securities JV in 2004 with domestic partner Beijing Gao Hua Securities, solidifying its position in China’s domestic financial markets. The JV, with 33 percent stake, allowed Goldman Sachs to offer a range of investment banking and securities services to domestic mainland China clients.

In late March this year, the bank had received approval from the China Securities Regulatory Commission or CSRC to increase its ownership in the JV to 51 percent.

At that time, Todd Leland, co-President of Goldman Sachs in Asia Pacific ex-Japan, had stated that the company would seek to implement the migration of business units currently operating under Beijing Gao Hua Securities across to one single corporate entity, GSGH, and also to move towards 100 percent ownership at the earliest opportunity.

Goldman Sachs is perhaps the first foreign bank to fully control securities business in China after the country opened its financial market to foreign banks this year.

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