Goldman's New Man in China
Goldman Sachs has appointed Cai Jin-Yong as CEO of Goldman Sachs Gao Hua Securities, its joint venture in China, to replace Zha Xiangyang who is retiring from the firm, according to an internal announcement. The appointment, which is effective immediately, comes as competition in China heats up with more international investment banks expected to be allowed to underwrite domestic securities soon. At present Goldman Sachs and UBS are the only two foreign firms with a license to do this.
Cai will also assume a newly created position as president of China investment banking, which will make him Goldman's top man in China with regard to its overall investment banking efforts. This will include M&A transactions, as well as IPOs of Chinese firms outside of China. Effectively, he will take over from Richard Ong who helped run investment banking in China from his position as co-head of Asia investment banking. Goldman announced at the end of January that Ong was leaving the bank after 15 years with the firm, but had agreed to become an advisory director starting this month.
Cai, who is already based in Beijing, is one of Goldman's most senior people within its Asian investment banking division, having been a managing director since 2001 and a partner since 2006. His primary focus until now has been on natural resources and telecoms and he has been involved in many of Goldman's key transactions in China in recent years, including China State Grid Corporation's $3.95 billion acquisition of the Philippine power grid last year, CNOOC's $2.3 billion acquisition of oil projects in Nigeria in 2006 and the $4.2 billion acquisition of PetroKazakhstan by PetroChina and its parent CNPC, also in 2006.
He also worked on the IPOs of integrated solar power company Yingli Green Energy and property company Soho China last year and on PetroChina's $2.9 billion Hong Kong listing in 2000, among others. Last month, he helped arrange a Rmb30 billion ($4.2 billion) bond with warrants for Sinopec, which was the largest ever such instrument sold in China's domestic markets.
Zha, who was a vice president of investment banking, had been CEO of Goldman Sachs Gao Hua since about the middle of last year and the fact that he resigns after such a short time suggests that he was only intended as a temporary solution when was promoted to fill the gap left by CEO Bill Wicker's return to New York in October 2006.
By appointing a partner to head the joint venture, Goldman may be attempting to raise the profile of the entity as it fights for underwriting mandates in the domestic stockmarket. Last year, Goldman Sachs Gao Hua was involved as a bookrunner on A-share IPOs for companies including Ping An Insurance and Bank of Ningbo and acted as a financial adviser to Bank of Communications on its domestic listing. It is also mandated for the upcoming A-share offerings of China Merchant Securities, Chongqing City Commercial Bank and Dongguan City Commercial Bank.
Cai, who is a Chinese native, joined Goldman Sachs in 2000 as an executive director in its advisory group. He earned a bachelor of science degree from Beijing University in 1982 and a doctor of philosophy in economics from Boston University in 1990.
Goldman hasn't announced a new co-head for Asia investment banking to replace Ong, relying for the moment on its other co-head, Mark Machin, to run the show on his own.