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July 21, 2009

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Sovereign wealth fund takes 40% CITIC stake

CHINA Investment Corp has agreed to buy a 40-percent stake in CITIC Capital Holding Ltd in its latest overseas acquisition while eying the recovery of the global economy.

CIC, the country's US$200-billion sovereign wealth fund, will acquire new shares to be issued by the investment firm and hold 40 percent in expanded capital, the China Securities Journal quoted a letter to CITIC Capital investors yesterday. The newspaper didn't reveal the value of the deal.

The Hong Kong-based CITIC Capital, equally held by CITIC Pacific and CITIC International Financial Holding Ltd, manages US$2 billion, 80 percent of which came from international investors such as IBM and General Electric.

The letter said CIC doesn't seek a controlling stake in the company, so CITIC Capital's business strategy, management structure and investment procedures won't be affected.

CITIC Capital, established in 2002, deals in private equity, real estate, mezzanine and debt finance, asset management and special situations.

CIC has shown interest in overseas investments after the global economy showed signs of recovery following pro-growth fiscal and monetary policies.

It has agreed to invest A$200 million (US$159 million) in Goodman Group, Australia's largest industrial property trust, to help the company pare down its debt, and spend US$1.2 billion buying common shares in Morgan Stanley because it is optimistic about the company's future growth and progress.

Canadian mining company Teck Resources Ltd also said earlier this month that it is selling a 17-percent stake to CIC for C$1.74 billion (US$1.5 billion) to reduce its debt.


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