BEIJING/SHANGHAI - Fred Hu, a high-profile Chinese dealmaker is stepping down as a partner of Goldman Sachs, 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, China's top property lender, Singapore state investor Temasek Holdings, 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, now the world's largest bank by market value.

In 2004, Hu helped Bank of Communications, China's No.5 bank by assets, sell a nearly 20 percent stake to Europe's No.1 bank HSBC Holdings Plc.

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.

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.

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.

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

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