One of Goldman Sachs' most senior China bankers has quit to follow in the footsteps of several former colleagues who left the group to establish mainland private equity funds.
Fred Hu, the bank's chairman of greater China, will retire as a partner next month after a 13-year career at Goldman, according to an internal memo seen by the Financial Times. He will remain as an advisory director.
Mr Hu plans to set up a private equity fund focused on Chinese deals, according to people familiar with the matter, and has contacted potential local and foreign investors in recent weeks.
Mr Hu declined to comment on his future plans. Goldman confirmed the content of the memo but declined further comment. However, one person familiar with the matter said: "Fred is keen to set up a fund like all the Goldman China bankers before him."
The mainland private equity industry has taken off over the past two years with local dealmakers keen to take advantage of investment opportunities presented by strong economic growth.
Fang Fenglei, Mr Hu's Goldman colleague who helped it launch its China investment banking joint venture, set up Beijing-based Hopu Investments in 2007. After Mr Fang launched Hopu, he remained as chairman of Goldman Sachs Gaohua Securities, a Beijing-based investment banking joint venture.
Mr Fang was joined at Hopu by Richard Ong, a former senior Goldman investment banker.
Frank Tang, another former senior Goldman banker, also set up a China-focused private equity fund.
Mr Hu joined Goldman as chief economist for greater China in 1997 before moving to the business side where he helped it establish its onshore presence. His departure is likely to draw more attention to Goldman's leadership structure in China, made complicated by the creation of Gaohua Securities.
As well as losing its top Chinese stars, Goldman has seen a swift rotation of non-Chinese bankers since it entered the market through its complicated joint venture structure in 2004.
Bill Wicker, an oil and gas banker and the venture's original head, often complained that he hated China and returned to New York after less than two years. A quick procession of more junior Goldman bankers with limited China experience have rotated through the Beijing office and some of Goldman's competitors say the firm lacks direction.
Mr Fang's departure to set up Hopu left Goldman in limbo because of his unique position as the founder and legal representative of its Chinese platform and its primary rainmaker. The bank now relies heavily on Cai Jinyong, its current China head, to maintain the difficult relationship with Beijing and Mr Fang.
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