A Financial Times report revealed that global investment banker Goldman Sachs (NYSE:GS) continues to make “private equity” investments with aid from Chinese funds. Separately, a Wall Street Journal report stated that the Commodity Futures Trading Commission (CFTC) has fined Goldman Sachs $5.5 million to settle a record-keeping violation.
Investment Details
In 2017, GS built a $2.5 billion fund in partnership with the China Investment Corporation (CIC), the Chinese sovereign wealth fund. The report suggests that GS has acquired seven U.K. and U.S.-based start-ups and private companies through the partnership.
In 2021, the GS-CIC private equity fund acquired LRQA (Lloyd’s Register Quality Assurance), which provides a range of inspection services, including management system certification, verification, and training services. LRQA’s primary focus sectors involve the aerospace, defense, energy, and healthcare industries, among others.
The other investments in American companies include a cloud computing company named Cprime, drug testing company Parexel, global supply chain tracking start-up Project44, retail technology group Aptos, lighting company Visual Comfort, and cooling system manufacturer Boyd Corporation.
In most of these deals, Goldman Sachs has other private investors as well, which means that the Chinese state fund’s financial involvement is comparatively small. Even so, the sovereign wealth fund is known to have more involvement in the running of the companies that it invests in.
Apart from the CIC, the other investors in the fund include Taiwan Life, Denmark’s ATP pension plan, and other American charitable foundations.
Goldman Sachs Fined for Record-Keeping Flaws
Meanwhile, the CFTC found that GS failed to maintain records and retain calls made by its traders between at least March 2020 and September 2020. This was during the COVID-19 period when employees worked from home and used their personal handsets to make trading calls. The banker has agreed to pay the fine and settle the charges.
Is GS a Good Long-Term Investment?
Based on the views of the 17 Top Analysts who recently rated Goldman Sachs, the stock has a Moderate Buy consensus rating. 11 top analysts have given GS a Buy rating while six have given the stock a Hold rating.
Top Wall Street analysts are those awarded higher stars by the TipRanks Star Ranking System. This is based on an analyst’s success rate, average return per rating, and statistical significance (number of ratings).
On TipRanks, the average Goldman Sachs price target of $391.98 implies 17.9% upside potential from current levels. Year-to-date, GS stock has lost 2.5%.
