Goldman Sachs Group Inc. (GS) brought back Mark Schwartz to run its Asian business from Beijing, after an 11-year hiatus during which he ran George Soros’s hedge-fund group and started an investment firm with Raj Rajaratnam.
Schwartz, 57, will also be vice chairman of the firm, New York-based Goldman Sachs said in a statement today. He fills a role left by J. Michael Evans, who served as chairman of the region since 2004 and is now based in New York as vice chairman and global head of growth markets.
The new Asia chief will be Goldman Sachs’s first regional chairman to be based in Beijing, signaling the growing importance of the world’s second-largest economy as the Wall Street bank targets emerging markets to bolster revenue. Rival JPMorgan Chase & Co. in April said Jeff Urwin, global head of investment banking, would move to Hong Kong and take on the additional role of Asia CEO.
“Unquestionably, China will continue to lead global growth in the next few years,” Cao Xuefeng, head of research at Chengdu-based Huaxi Securities Co., said by telephone. The nation’s economic expansion “will translate into greater business opportunity.”
Schwartz, who had joined Goldman Sachs’s investment banking unit in 1979, will again be on the management committee, which he served on from 1999 until his departure from the firm in 2001. He was head of capital markets from 1991 to 1997, when he moved to Tokyo to oversee Japan operations. He was chairman of Asia from 1999 until 2001.
“He played a critical role in helping to build our businesses across Asia Pacific,” Chief Executive Officer Lloyd C. Blankfein said in the statement. “Those experiences and relationships will be even more important as we focus on continuing to help our clients and grow our franchise across the region.”
Blankfein, who began cutting costs in 2011 as revenue declined for the second straight year, is counting on international expansion and a market rebound to restore profit growth. The firm derived $3.9 billion of net revenue from Asia last year, or about 13 percent of the total, down from 18 percent in 2010, according to data compiled by Bloomberg.
In China, Goldman Sachs in 2004 became the first Wall Street bank to form a local securities venture with management control. The nation last month agreed to let foreign banks raise their stakes in domestic securities firms to as much as 49 percent from 33 percent.
As well as stock and bond underwriting, the U.S. firm is expanding its private-equity, asset management and institutional brokerage businesses in China. Through its local partner, Goldman Sachs won approval in late 2010 to offer investment products, including to institutional investors and affluent clients. It estimates that of all accounts opened by wealthy people at the firm globally last year, more than a quarter were in China.
“The Asia Pacific region continues to represent many of the most dynamic and important economies in the world,” Schwartz said in the statement.
Schwartz has been chairman of investment firm MissionPoint Capital Partners since 2006. He was a senior adviser to Soros Fund Management LLC from 2002 and then president and CEO from 2003 to 2004.
He started an investment firm in early 2006 with partners including Rajaratnam and Rajat Gupta. The blended hedge fund and private equity company called Taj Capital Partners Asia Fund LP planned to hire a 50-person team to invest about $2 billion in South Asia, according to an investor prospectus. By December 2006, the plans had changed, with the fund being renamed New Silk Route and the size reduced to $1.34 billion.
Rajaratnam was convicted of insider trading last year and former Goldman Sachs director Gupta is currently on trial for leaking tips to the Galleon Group LLC co-founder.
In the new job, Schwartz will work with Masanori Mochida, president of Goldman Sachs Japan, and David Ryan, president of Asia Pacific ex-Japan.