CIC may get extra US$50b to buy European and US assets
Source: Agencies |
December 24, 2011, Saturday
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Print Edition
Print Edition
CHINA Investment Corp, the country's US$410 billion sovereign wealth fund is set to receive additional funding of up to US$50 billion, two sources said yesterday, a step that could help it move quickly to buy overseas assets, especially in Europe.
The new funding comes along with an agreement between relevant Chinese government agencies to give CIC new money to manage every year, the sources who had knowledge of the matter said.
The agreement would lay out a long-term framework under which CIC would be allocated money to manage from China's foreign exchange reserves and would also chart the future of its domestic investment arm, Central Huijin Investment, the sources said.
"The final plan for capital injection will be unveiled shortly, and it could be US$50 billion," a source close to the matter said.
CIC officials declined to comment.
The cash injection follows in the wake of plans - reported by Reuters earlier this month - to create a new US$300 billion vehicle that would be affiliated with China's State Administration of Foreign Exchange, the part of the central bank in charge of the daily management of China's US$3.2 trillion in foreign exchange reserves.
The new funds for CIC, as well as the planned US$300 billion venture under SAFE, were earmarked well before the onset of the eurozone debt crisis that has sparked international speculation about possible contributions from China to a bailout effort.
But the funding would give CIC firepower for buys at a time when attractive European and United States assets may come up for sale. CIC operates independently of the central bank and said in March that it had fully invested all its cash and would like the government to give it more funds.
Chinese media have reported since late 2009 that CIC was seeking US$100-200 billion in new funding, but there have been no subsequent reports of progress.
CIC was created in 2007 when the Ministry of Finance issued 1.55 trillion yuan (US$245 billion) in special yuan bonds to swap yuan for US$200 billion worth of foreign currency from SAFE.
That provided the initial funds for active management in a bid to enhance returns from the world's largest pile of official foreign reserves.
China's leaders have said recently that they will seek investments in the real economies of the US and Europe apart from their routine investments in government debt.
Germany's "manager magazin" said in an article published yesterday, citing company sources, that CIC was the frontrunner to take a 5-10 percent stake in German luxury carmaker Daimler.
The magazine said Daimler's Chief Financial Officer Bodo Uebber has hired an investment bank to arrange a potential deal.
Daimler's Chief Executive Dieter Zetsche said in July that he would welcome additional investors from China, but added he did not think the Chinese would try to take control.
On Thursday, South Africa's Shanduka Group said it had sold a 25 percent stake to CIC, the latest investment by China in Africa's resources sector.
The new funding comes along with an agreement between relevant Chinese government agencies to give CIC new money to manage every year, the sources who had knowledge of the matter said.
The agreement would lay out a long-term framework under which CIC would be allocated money to manage from China's foreign exchange reserves and would also chart the future of its domestic investment arm, Central Huijin Investment, the sources said.
"The final plan for capital injection will be unveiled shortly, and it could be US$50 billion," a source close to the matter said.
CIC officials declined to comment.
The cash injection follows in the wake of plans - reported by Reuters earlier this month - to create a new US$300 billion vehicle that would be affiliated with China's State Administration of Foreign Exchange, the part of the central bank in charge of the daily management of China's US$3.2 trillion in foreign exchange reserves.
The new funds for CIC, as well as the planned US$300 billion venture under SAFE, were earmarked well before the onset of the eurozone debt crisis that has sparked international speculation about possible contributions from China to a bailout effort.
But the funding would give CIC firepower for buys at a time when attractive European and United States assets may come up for sale. CIC operates independently of the central bank and said in March that it had fully invested all its cash and would like the government to give it more funds.
Chinese media have reported since late 2009 that CIC was seeking US$100-200 billion in new funding, but there have been no subsequent reports of progress.
CIC was created in 2007 when the Ministry of Finance issued 1.55 trillion yuan (US$245 billion) in special yuan bonds to swap yuan for US$200 billion worth of foreign currency from SAFE.
That provided the initial funds for active management in a bid to enhance returns from the world's largest pile of official foreign reserves.
China's leaders have said recently that they will seek investments in the real economies of the US and Europe apart from their routine investments in government debt.
Germany's "manager magazin" said in an article published yesterday, citing company sources, that CIC was the frontrunner to take a 5-10 percent stake in German luxury carmaker Daimler.
The magazine said Daimler's Chief Financial Officer Bodo Uebber has hired an investment bank to arrange a potential deal.
Daimler's Chief Executive Dieter Zetsche said in July that he would welcome additional investors from China, but added he did not think the Chinese would try to take control.
On Thursday, South Africa's Shanduka Group said it had sold a 25 percent stake to CIC, the latest investment by China in Africa's resources sector.
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