Fred Hu, chairman of Greater China at Goldman Sachs, will retire as a partner from the bank in April, but will remain as an advisory director to the firm, a Goldman Sachs spokeswoman confirmed.
Following his retirement, Hu plans to launch a private equity fund focused on China, according to media reports. Singaporean sovereign fund Temasek Holdings, Goldman Sachs and an investment arm of China Construction Bank are expected to commit to Hu’s fund, sources told Reuters.
Although no final agreement has reached with potential limited partners, Hu is expected to start fundraising for the multi-billion dollar fund in 2010, sources told the newswire.
“Given Hu's high influence in China and now strong support from his investors, I believe Hu's new private equity fund will make the tough competitions for China deals even tougher,” a source told Reuters.
Prior to joining Goldman Sachs as chief economist for China in 1997, Hu worked at the International Monetary Fund in Washington where he was engaged in macroeconomic research and policy consultation for a number of member countries including China. Hu has also advised the Chinese government on financial reform, pension reform and macroeconomic policies.
He follows in the footsteps of Fang Fenglei, who was formerly the chairman of Goldman Sachs Gao Hua Securities, before before giving up day to day duties to establish his own private equity firm. He founded Hopu Investment Management in 2007. Hopu closed its first fund on $2.5 billion and was backed by Temasek and Goldman.
Goldman’s former co-head of investment banking in China, Richard Ong, also abandoned his post in 2008 this year to join Hopu as chief executive.
Another former Goldman banker, Frank Tang, left the bank in 2005 to join Temasek Holdings as a senior managing director of China investments. He then left the Singaporean sovereign wealth fund and went on to set up FountainVest, a China-focused private equity firm, in September 2007.
FountainVest closed its maiden private equity fund on almost $1 billion in November 2008 and received commitments from the likes of Temasek, Canada Pension Plan Investment Board and the Ontario Teachers’ Pension plan, according to a source close to the fundraising.