CIC buys 10% of Heathrow as fund seeks to boost return
Source: Agencies/Shanghai Daily |
November 2, 2012, Friday
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Print Edition
Print Edition
CHINA'S sovereign wealth fund bought 10 percent of London's Heathrow Airport from investors, including Spanish builder Ferrovial SA, as the fund seeks to boost investment return amid a global economic slowdown.
Stable Investment Corp, a unit of China Investment Corp, which helps China manage the world's largest foreign-currency reserves, paid Ferrovial 257.4 million-pound ($414.6 million) for a 5.72 percent of Heathrow parent company FGP Topco Ltd, the Madrid-based firm said in a statement yesterday.
The fund also added shares from other investors worth 192.6 million pounds, bringing its total holdings of the hub to 10 percent, according to the statement.
Following the transaction Ferrovial holds an indirect stake of 44.27 percent of Heathrow Airport. But this stake will further reduce to 33.65 percent once European competition authorities approve Qatar Holdings' purchase of a stake in FGP Topco, the Madrid-based company said.
"We will continue to work with the new shareholders and with existing shareholders" to maintain Heathrow's rank "as one of the best infrastructure assets in the world," Ferrovial CEO Inigo Meiras said in the statement.
CIC posted a 4.3 percent loss on its overseas investments last year, its worst performance since the Beijing-based company was set up in 2007, as declines in global commodity prices roiled the value of its resources-heavy portfolio. The weak recovery in the global economy is posing a challenge to overseas investments, CIC's Executive Vice President Fan Yifei told a seminar in Tsinghua University in Beijing on Wednesday.
CIC has taken a "flexible" approach in its investments abroad such as by taking minority stakes in target companies amid rising wariness over foreign acquisitions by Chinese firms, he said.
Chinese firms should avoid "a headlong rush" to buy foreign assets as it could stoke suspicion in the countries they invest in, he said.
The CIC board requires a 10-year annualized investment return ratio to be 3 percentage points higher than inflation in G20 countries excluding China and the European Union, according to Fan.
The fund can tolerate short-term volatility in its investments because dividends from Chinese lenders are enough to cover its interest payments from a bond sale for now, Fan said.
Stable Investment Corp, a unit of China Investment Corp, which helps China manage the world's largest foreign-currency reserves, paid Ferrovial 257.4 million-pound ($414.6 million) for a 5.72 percent of Heathrow parent company FGP Topco Ltd, the Madrid-based firm said in a statement yesterday.
The fund also added shares from other investors worth 192.6 million pounds, bringing its total holdings of the hub to 10 percent, according to the statement.
Following the transaction Ferrovial holds an indirect stake of 44.27 percent of Heathrow Airport. But this stake will further reduce to 33.65 percent once European competition authorities approve Qatar Holdings' purchase of a stake in FGP Topco, the Madrid-based company said.
"We will continue to work with the new shareholders and with existing shareholders" to maintain Heathrow's rank "as one of the best infrastructure assets in the world," Ferrovial CEO Inigo Meiras said in the statement.
CIC posted a 4.3 percent loss on its overseas investments last year, its worst performance since the Beijing-based company was set up in 2007, as declines in global commodity prices roiled the value of its resources-heavy portfolio. The weak recovery in the global economy is posing a challenge to overseas investments, CIC's Executive Vice President Fan Yifei told a seminar in Tsinghua University in Beijing on Wednesday.
CIC has taken a "flexible" approach in its investments abroad such as by taking minority stakes in target companies amid rising wariness over foreign acquisitions by Chinese firms, he said.
Chinese firms should avoid "a headlong rush" to buy foreign assets as it could stoke suspicion in the countries they invest in, he said.
The CIC board requires a 10-year annualized investment return ratio to be 3 percentage points higher than inflation in G20 countries excluding China and the European Union, according to Fan.
The fund can tolerate short-term volatility in its investments because dividends from Chinese lenders are enough to cover its interest payments from a bond sale for now, Fan said.
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