With Gao Hua Joint Venture, the Firm Establishes a Foothold in China's Domestic Financial Markets

ThemeS: Globalization | Clients

Goldman Sachs announces a joint venture with Beijing Gao Hua Securities in 2004, strengthening its position in China’s domestic financial markets.

A decade after opening its offices in Beijing and Shanghai and its first principal investment in China (insurance giant Ping An), Goldman Sachs deepened its roots in the country in 2004, when it established a joint venture investment banking firm in China called Goldman Sachs Gao Hua Securities Company Limited.

With China’s 2001 accession to the World Trade Organization, the country’s service sector was considerably liberalized. Banking, financial services, insurance, and telecommunications were opened up to limited foreign investment. Against this backdrop, and having believed for years in China’s global economic potential, Goldman Sachs intensified its efforts to establish a greater presence in the country.

The Gao Hua joint venture was groundbreaking in that it allowed Goldman Sachs to offer a range of investment banking and securities services to domestic mainland China clients, including underwriting locally listed ‘A’-share transactions and bonds and offering domestic financial advisory services – something a foreign firm could not do on its own in China at the time. Goldman Sachs held 33 percent of the new venture, the maximum allowed by law, while the remaining 67 percent was owned by its Chinese partner, the recently established Beijing Gao Hua Securities Company, Ltd. This firm was founded by an investor group led by Fang Fenglei and Legend Holdings, one of China’s leading conglomerates. Goldman Sachs Gao Hua held the investment banking license, whereas Gao Hua Securities ran securities trading and private wealth management.

From inception, Goldman Sachs Gao Hua operated as a fully integrated part of the firm’s Investment Banking Division, and established itself as a key player in China, allowing the firm to offer Chinese clients both onshore and offshore financing solutions. In February 2015, the joint venture co-executed a secondary placement of Shanghai-listed Industrial Bank Co. The US$2.1 billion (RMB12.7 billion) placement was Goldman Sachs’ first-ever institutionally marketed A-share block sale in China.

Gao Hua is emblematic of Goldman Sachs’ strategic commitment to China and its persistence and creativity in establishing a strong local reputation in the Chinese market.


This article was originally published as part of a series commemorating the 150th anniversary of Goldman Sachs' founding in 1869.