THE GOLDMAN SACHS GROUP, INC. 
HONG KONG (Reuters) - Goldman Sachs (>> Goldman Sachs Group) has suspended its preliminary work on a planned U.S. initial public offering (IPO) for Chinese conglomerate HNA Group's IT outsourcing unit Pactera, four people familiar with the matter told Reuters.
One of the sources, who could not be identified as the negotiations are not public, said the Wall Street bank shelved the project after the deal failed to meet the bank's internal due diligence requirements, or "know-your-customer" checks.
Reuters reported in July that HNA had tapped Goldman to work on the U.S. IPO of Pactera, a Beijing-based firm it bought from Blackstone last year for $675 million in cash. The unit was renamed HNA Ecotech Panorama Cayman Co this year.
Goldman was not formally mandated for the IPO, which was in the early stages, but had been tapping investors for the firm's pre-IPO fundraising round.
HNA said in a statement sent to Reuters that Pactera had not started the formal IPO process and had not appointed any investment bank to assist in the IPO.
"HNA and Goldman Sachs have always had a strong working relationship, and currently all joint projects between the two companies are functioning normally," it said.
Goldman declined to comment. Pactera did not respond to requests for comment.
The sources said the suspension of work on the IPO by Goldman could delay Pactera's plan to list next year.
Pactera had initially sought to close a $200 million pre-IPO round in the third quarter of 2017, and list in early 2018.
The sources said Pactera was pressing ahead without Goldman, hoping to act as a listed vehicle for HNA's Ecotech arm, focused on technology investments. It is seeking to raise capital through convertible bonds, two of the sources said.
HNA, one of China's most acquisitive conglomerates, has seen its banking relationships put to test since the summer, as Beijing cracks down on what it deems excessive deals.
China's banking regulator in June ordered a group of lenders to assess their exposure to offshore investments by a handful of acquisitive groups, including HNA.
The New York Times reported in July that Bank of America Merrill Lynch had pulled back from working with the group due to its opaque ownership stricture. HNA Chief Executive Adam Tan said later that BAML had not dealt closely with the group.
The sources said Goldman had not severed ties with HNA, adding due diligence checks were made separately for every deal.
(Reporting by Kane Wu and Julie Zhu; Additional reporting by Matt Miller; Editing by Sumeet Chatterjee, Kim Coghill and Edmund Blair)
By Kane Wu and Julie Zhu
