Goldman Sachs has signed an agreement to establish a renminbi-denominated private equity fund with the Beijing city government on Thursday, its first single-country fund, as rival Morgan Stanley prepares to launch its own Chinese currency fund next week.

The two Wall Street groups are following private equity groups such as Carlyle, Blackstone and TPG, which have set up renminbi-denominated funds.

They will also face competition from a rising number of homegrown Chinese funds that have sprung up as a result of government policies aimed at encouraging domestic private equity funds and investment. “There have literally been hundreds of domestic Chinese funds established in the last couple of years,” said Ying White, partner at law firm Akin Gump in Beijing.