UPDATE 2-Top Goldman partner Hu to launch China fund -sources

* Fred Hu to retire as a partner at Goldman Sachs – memo

* Hu plans to launch new China private equity fund – sources

* CCB, Goldman and Temasek expected to help Hu – sources

(Adds Hu’s career path, more details, background)

By George Chen and Samuel Shen

BEIJING/SHANGHAI, March 10 (BestGrowthStock) – Fred Hu, a
high-profile Chinese dealmaker is stepping down as a partner of
Goldman Sachs (GS.N: ), according to an internal memo, as sources
said he plans to launch a new private equity fund.

Hu, who worked for the Wall Street bank for 13 years, will
retire as a partner in April, but remain as an advisory director
of the firm, according to the memo obtained by Reuters.

An investment arm of China Construction Bank (601939.SS: )
(0939.HK: ), China’s top property lender, Singapore state investor
Temasek Holdings [TEM.UL], and Goldman were expected to help Hu
launch the China-dedicated fund, according to sources with
direct knowledge of the plan.

“Given Hu’s high influence in China and now strong support
from his investors, I believe Hu’s new private equity fund will
make the tough competitions for China deals even tougher,” said
one of the sources.

“It’s interesting to see so many investment bankers are now
stepping into the private equity industry,” he said.

In China, as well on in Wall Street, Hu is well known for
several multi-billion-dollar landmark deals. In 2006, he made a
$3.78 billion investment for Goldman in Industrial and
Commercial Bank of China (1398.HK: ) (601398.SS: ), now the world’s
largest bank by market value.

In 2004, Hu helped Bank of Communications (3328.HK: )
(601328.SS: ), China’s No.5 bank by assets, sell a nearly 20
percent stake to Europe’s No.1 bank HSBC Holdings Plc (HSBA.L: )
(0005.HK: ).

No final agreement between Hu and institutional investors,
also known as limited partners for a private equity fund, has
been reached but Hu expects to launch the multi-billion-dollar
fund this year, according to the sources.

The sources declined to be identified as they were not
authorised to speak to the media. Goldman confirmed the content
of the memo, but declined to comment further. Hu’s mobile phone
went unanswered when contacted by Reuters for comment.

GOLDMAN BANKERS

Hu is set to become the latest senior Goldman banker to join
the private equity industry, while China remains as a focus for
dealmakers despite the global credit crisis.

In January 2009, Mount Kellett Capital Management, a private
equity firm run by former Goldman partner Mark McGoldrick –
known as ‘Goldfinger’ – raised at least $1.5 billion and was on
the hunt for investments. [ID:nHKG151908]

In November 2008, FountainVest, led by Frank Tang, a former
senior executive for Temasek who was also a former senior
Goldman banker, said it had raised nearly $1 billion for its
first private equity fund. [ID:nSHA102967]

Hu’s Goldman colleague, Fang Fenglei, who helped Goldman
launch its China investment banking joint venture, established
Beijing-based Hopu Investments in 2007 and completed raising a
$2.5 billion China fund in 2008.

Hopu’s main investors also include Temasek and Goldman.
After Fang launched Hopu, Fang remained as chairman of Goldman
Sachs Gaohua Securities, the Beijing-based investment banking
joint venture of the Wall Street bank.

Now, Hopu is one of China’s most influential buyout funds.

Hu joined Goldman as chief economist for Greater China in
1997. In 2002, he moved to the business side of Goldman and
helped the U.S. bank establish its onshore presence in China.

Hu was promoted to a partner in 2004, making him one of very
few Chinese for the top-level posts at the bank.

He was named Goldman Sachs Greater China Chairman in 2008.

For related Asian private equity news, Reuters 3000 Xtra
users can double click on: [LEN-RTRS-ASIA-PVE]

Investing

(Reporting by George Chen in BEIJING and Samuel Shen in
SHANGHAI; Editing by Erica Billingham)

UPDATE 2-Top Goldman partner Hu to launch China fund -sources