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Sovereign Wealth Funds

CIC is said to join Goldman Sachs for $5 billion U.S. investment fund

Tu Guangshao

China's sovereign wealth fund has tapped Goldman Sachs Group (GS) to help invest as much as $5 billion in the U.S. manufacturing industry, according to people briefed on the matter.

Goldman Sachs will run a newly established private equity fund and invest some money alongside China Investment Corp., said the people, who asked not to be identified because the effort hasn't been publicly announced. The fund is expected to be unveiled this week, when Goldman Sachs CEO Lloyd Blankfein will be in China as part of President Donald Trump's visit, one of the people said.

CIC, currently led by President Tu Guangshao after Chairman Ding Xuedong returned to the State Council in February, is boosting investments in private equity, real estate and hedge funds to diversify from listed companies and pursue returns above market averages, company executives said earlier this year.

Mr. Trump will arrive in China on Wednesday with executives from some 40 companies seeking deals in sectors ranging from energy to aviation to financial services. One of the biggest under negotiation would see China Petroleum & Chemical Corp. invest billions of dollars to create thousands of jobs in hurricane-hit areas of Texas and the U.S. Virgin Islands.

Goldman Sachs may only be able to contribute 3% of the fund because of U.S. rules regarding banks' private equity investments. The firms will likely bring in other third-party investors, one of the people said.

China needs to "innovate" its approach to overseas investments as rising protectionism in target markets has blocked some acquisitions, Mr. Tu told a forum in Suzhou of eastern Jiangsu province on Saturday. Among measures considered, CIC is exploring multilateral and bilateral funds, which can help reduce barriers by binding all sides' interests together, Mr. Tu said, according to a transcript of his remarks on his company's website.