The New York-based bank aims to invest a quarter of its newly raised $5.2 billion growth fund in the region, said people familiar with the matter, who asked not to be named while discussing information. internal.
In an interview this month, Stephanie Hui, co-head of alternative investment in Asia at Goldman Sachs Asset Management, said the bank had “plugged in” to India, while investors overall divert capital from emerging markets that was previously destined for China.
“While there is enthusiasm for China’s reopening, capital markets have not yet rebounded and therefore transaction flow has not fully rebounded either,” she said. . “Investors on the public side are seeing flows back to the stock market, but on the private side there is still a bit of a time lag. Meanwhile, India and Japan share the limelight.
China is struggling to attract capital after the country’s protracted Covid Zero policy and a crackdown on private companies, including its biggest tech companies, have dampened the economy in recent years. At the same time, India – and its rapidly growing economy – has become an important bet for global financial firms, although recent turmoil at billionaire Gautam Adani’s business empire has shaken the appeal.
Also with rising interest rates and collapsing stock markets, the global venture capital market collapsed. Funding in India fell to $2.7 billion last quarter, the lowest level in more than two years, according to CB Insights.
Asia was the top location for the bank’s growth-related investments, accounting for nearly 50% of the total from 2003 to 2020, the sources said. Goldman’s growth fund has an average investment size in Asia of $30-50 million. The company this week led a $150 million investment in Indian fintech startup InsuranceDekho, an unusually large investment round that will help it target an underserved domestic market. It has also invested in Raputa Robotics in Japan and LePure, a provider of single-use bioprocessing solutions in China.
Outside of India, current bright spots are in Japan, Korea and Australia, Hui said.
Last year, the bank poached David Grayce from Pacific Equity Partners in Australia, rehired SJ Lee from TPG Capital for its Korea business and built its six-person Japanese growth investing team, Hui said, who is also co-head of growth equities within the asset management department. Overall, Goldman now has 35 private equity investment professionals for its growth and buyout team in Asia. To strengthen its activities in China, it relocated its partner, Michael Hui, to Shanghai in the fourth quarter of 2022.
The company has also bolstered its fundraising capabilities by hiring three managing directors, including Craig Balenzuela from Queensland Investment Corporation in Australia, Yugo Yamamoto from Guggenheim Partners in Japan and Meng Zhang from Ares Management in China. At the end of 2019, Stuart Wrigley moved to Asia as Head of Alternative Capital Markets and Strategy and was made Partner in November.
Last year, the company raised $72 billion for alternative third-party platforms, including real estate, private equity and credit platforms as part of CEO David Solomon’s overhaul to trim its portfolio of investment on the balance sheet. In 2022, the bank reduced its alternative investments on the balance sheet from $9 billion to $59 billion, according to its latest earnings presentation.
While China’s economy is now improving after the country lifted its Covid Zero restrictions late last year, geopolitical tensions and ongoing political maneuvering in the United States ahead of next year’s election mean that relations could remain strained.
“Previously, say two or three years ago, the private equity market in Asia was very focused on China because of its scale,” Hui said in the interview. “Now we are more geographically balanced.”
Across Asia, Goldman will further expand its healthcare network and leverage capital in select enterprise software companies and the consumer sector, while being more cautious on fintech, Hui said. In China, the team has also adjusted its focus in response to the broader environment while being “cautiously optimistic”, she said.
“We calibrate accordingly. We focus on sustainability, healthcare and enterprise software, and we have investments in consumers, while being measured in technology.