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November 20, 2009

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Home » Business » Energy

CIC stake buy shows focused investment

China Investment Corp, the country's sovereign wealth fund, will buy a 20-percent stake in the country's biggest producer of polysilicon for HK$5.5 billion (US$710 million) as it seeks to boost investment in the energy and commodity sectors.

CIC and Hong Kong-listed GCL-Poly Energy Holdings Ltd also agreed to set up a company with a registered capital of US$500 million that will invest in solar power projects, according to a stock exchange filing yesterday.

GCL-Poly will hold 51 percent in the venture, and CIC will take the balance. CIC will also have the right to appoint two executives to the company's board of directors.

CIC has spent more than US$4 billion since September to invest in commodity and resource firms, after losing money on investment in financial firms, including Blackstone and Morgan Stanley. CIC bought an 11-percent stake in Kazakhstan-based JSC KazMunaiGas Exploration Production for about US$393 million and a 15-percent share in Noble Group, a Hong Kong-based commodity supplier for US$850 million.

In another move, CIC said earlier this month it will buy 15 percent of Virginia-based power company AES for US$1.58 billion.

GCL-Poly will issue 3.11 billion new shares to CIC at HK$1.79 each, a 28-percent discount from its closing price yesterday. Its shares surged 8.23 percent to HK$2.50 after it resumed trading following a three-day suspension.

"The transaction will strengthen GCL-Poly's financial situation and consolidate its status in the new energy sector," said Zhu Gongshan, chairman and CEO of the company.

GCL-Poly said in July that it will buy a domestic privately-owned solar-cell parts maker and to boost its output capacity for polysilicon, the costliest component in solar panels, by four times.


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