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The investing world is full of once-popular ideas that, in hindsight, are decidedly less clever. These include the Goldman Sachs US-China Industrial Partnership Fund. The private equity investment vehicle was established in 2017 to funnel money from state-backed investor China Investment Corporation (CIC) into Western assets.

A Financial Times report said the fund had made five undisclosed investments, raising concerns about China’s growing influence.

The cooperative fund’s aggressive stance is at odds with changing geopolitical sentiment. Western governments are increasingly wary of Chinese investors. One might think that the fund’s gains were minimal, or that it had quietly shrunk. But in fact, it’s not.

Private equity deals aren’t known for ample disclosure. Goldman Sachs said the fund was managed in compliance with all laws and regulations.

UK-based LRQA has a restricted cybersecurity business and the acquisition apparently triggered foreign direct investment approval processes in six countries, including the UK. Among them, CIC’s participation will be disclosed to the British government.

It is unclear, however, under which framework the submissions to British authorities took place. The LRQA deal happens in 2021. From January 2022, the United Kingdom has tightened controls on Chinese investment through the National Security and Investment Act.

Until then, buyers can voluntarily seek trading guidance from officials. This is partly due to the government’s ability to review them retrospectively in 2022.

One of the reasons the LRQA deal may have escaped scrutiny is the relatively limited involvement of the CIC. The Goldman Sachs Partner Fund is just a handful of investors. Much of the money came from one of Goldman’s large flagship private equity vehicles. CIC has no board representation and no access to corporate information.

Goldman Sachs has courted the Chinese elite before. So is the British government. U.S.-China tensions put an end to that. But permanent capital remains. A fuller disclosure of what regulatory hurdles the fund has cleared would be welcome.

Lex is the FT’s concise daily investing column. Expert writers from four global financial centers provide informed, timely advice on capital trends and big to explore


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