Goldman Pursues Majority Stake in Its China Venture
August 21 2019 - 5:03AM
Dow Jones News
By Chao Deng
BEIJING-- Goldman Sachs Group Inc. has applied with Chinese
regulators to take a majority stake in an investment-banking joint
venture, the most recent move by a foreign company to tap the
nation's vast financial sector.
The company has filed paperwork to increase its stake in Goldman
Sachs Gao Hua Securities Co. to 51% from 33%, with the goal of
taking over the local operation completely, a spokesman said.
Beijing is opening up its financial sector and has given
permission to handful of foreign companies to own majority stakes
in mainland banking, securities and insurance sectors. Before 2017,
Western companies could operate in China only as a minority partner
in a securities joint venture with a local company.
Expanding in China has come slower than many foreign companies
hoped, in large part due to regulators' restrictions. JPMorgan
Chase & Co. and UBS Group AG are among the companies that have
been allowed majority stakes. Goldman had waited to apply to figure
out a way to meet the Chinese securities regulator's requirement
that majority owners have at least 100 billion yuan ($14.2
billion?) in net assets.
Goldman spokesman Edward Naylor declined to disclose details on
how they figured out how to meet the requirement but said the
company decided to meet the net-assets requirement instead of
trying to convince regulators to overlook it. Industry executives
and analysts had lodged complaints that the threshold is
unnecessarily high, meaning only a handful of foreign securities
firms operating in the China market could meet it.
In recent months, China sped up its timeline for opening up the
financial sector. It will let foreigners freely invest in futures,
securities and life insurance in 2020, one year ahead of Beijing's
previous schedule.
China is opening the sector while it is locked in a trade war
with the U.S. and faces downward pressure on its economy.
Mr. Naylor said that Chinese businessman Fang Fenglei and Legend
Holdings, the two largest shareholders in Beijing Gao Hua
Securities Co. are expected to decrease their stakes. "The endgame
for us has always been 100%" ownership, he said.
Write to Chao Deng at Chao.Deng@wsj.com
(END) Dow Jones Newswires
August 21, 2019 04:48 ET (08:48 GMT)
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