Goldman has stake in China group suing M.Stanley-FT

NEW YORK, Nov 2 (Reuters) - Goldman Sachs Group (GS.N) is the largest foreign investor in China Haisheng Juice Holdings (0359.HK), a Chinese company suing Goldman archrival Morgan Stanley over a derivatives deal, the Financial Times reported on its website on Monday.

Morgan Stanley and Haisheng are battling in British and Chinese courts over a hedging contract.

In London, Morgan Stanley is pursuing $26 million it alleges it is owed after Haisheng failed to post collateral relating to the renminbi-dollar hedges. The Chinese company also is suing the U.S. investment bank in a domestic court, accusing Morgan Stanley of misleading sales.

Goldman Sachs made its first investment in Haisheng in early 2005 and its private equity arm holds 20 percent of Haisheng's Hong Kong-listed shares, the FT said. Goldman does not have a board seat on Haisheng.

A Haisheng victory would likely embolden other Chinese companies to take action against foreign banks, the FT said. Goldman, for example, is negotiating with Shenzhen Nanshan Power (000037.SZ), a utility, to settle a dispute relating to oil derivatives.

Goldman and Morgan were not immediately available for comment. (Reporting by Joseph A. Giannone; Editing by Gary Hill)