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Goldman investment lifts Chinese carmaker Geely
It took four months of negotiations for China's Geely Automobile to sell a 12% stake to a Goldman Sachs (GS) investment fund for $245 million. But the seeds of the deal, announced on Sept. 22, were planted a year ago. On Sept. 29, 2008, one of Geely's Chinese rivals said it had won a $231 million investment from a company controlled by Warren Buffett. That news made little-known BYD an investor favorite, and its stock has since surged 750%.
Executives at Geely took notice. "We weren't satisfied with our shareholder structure," says Daniel Dai, vice-president for international business at Hong Kong-listed Geely. "There were too many hedge funds." Geely management decided they needed a star investor like Buffett interested in making what Dai calls "a long-term commitment to our future development." And not just any investor would do. Geely wasn't looking for small names. The goal, says Dai, was to secure "a VIP investor, like Mr. Buffett."