Goldman Sachs Faces Controversy Over Acquisitions of US and UK Companies with Chinese Government Funds

Acquisition of Western Company Shares through CIC Partnership Fund
Including 7 Firms such as UK Cybersecurity Companies
Active Investment Continues after Biden Administration Launch

American investment bank Goldman Sachs has been continuously acquiring US and UK companies using funds from the Chinese government. Amid escalating tensions between the US and China, it has been revealed that Goldman Sachs also invested in a UK company providing security services to the British government, a US ally, sparking growing controversy.

According to major foreign media on the 29th (local time), Goldman Sachs purchased shares in seven British and American companies through a $2.5 billion private equity fund (PEF) called the 'Partnership Fund,' established in 2017 with the China Investment Corporation (CIC), China's sovereign wealth fund. The investment targets included a supply chain tracking startup, a cloud computing consulting firm, and system manufacturers used in artificial intelligence (AI), drones, and electric vehicle batteries.

While it was known that Goldman Sachs invested in these companies, it has now been revealed that part of the investment capital was sourced from CIC. Established by the Chinese government in 2007, CIC is China's first sovereign wealth fund, with assets totaling $1.35 trillion (approximately 1,780 trillion KRW) as of the end of 2021. It invests half of its global portfolio in alternative assets such as private equity funds. One foreign media outlet pointed out, "This kind of deal clearly shows how sovereign wealth funds use private equity funds to indirectly acquire stakes in key companies of other countries."

At the time of the establishment of this private equity fund, the investment targets were not a subject of controversy. The fund was launched in 2017 when former President Donald Trump made a state visit to China, as part of efforts to strengthen US-China industrial cooperation. It was a product that expected to expand the business of US companies in China through Chinese capital investment in US companies. However, the atmosphere changed as tensions between the US and China escalated after the Biden administration took office.

In this situation, Goldman Sachs actively conducted investment activities using the fund's capital, making four investments in 2021 and one in 2022. Notably, among the companies invested in by the fund in 2021 was LRQA, which owns Nettitude, a cybersecurity firm approved by the UK government. Nettitude is known for supporting security enhancements for governments and defense-related organizations worldwide. The UK government avoided specific comments on this matter but stated, "The government will not hesitate to use our powers if security concerns are confirmed."

Considering the Biden administration's negative stance on China's indiscriminate overseas mergers and acquisitions (M&A) and capital investments, criticism of Goldman Sachs is expected to intensify. Previously, US authorities blocked a Chinese capital-backed attempt to acquire South Korea's MagnaChip Semiconductor in 2021, citing national security reasons.

Goldman Sachs announced on the 19th (local time) that its first-quarter revenue amounted to $6.34 billion, a 40% decrease compared to the same period last year. The photo shows Goldman Sachs stock being traded on the New York Stock Exchange. (EPA = Yonhap News) Photo by EPA

Goldman Sachs explained in a statement, "The partnership fund is a US fund operated by US managers," adding, "It is managed in compliance with all laws and regulations." They further emphasized, "We continue to invest in US and global companies and strive to increase sales in the Chinese market."

Foreign media reported, "Goldman Sachs is investing in Anglo-American companies with Chinese government capital even amid rising tensions between China and the West," and noted, "Goldman Sachs CEO David Solomon continues cooperation with CIC, having met with the CIC vice chairman last March."

This content was produced with the assistance of AI translation services.