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August 27, 2009

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Home » Business » Finance

CIC buys 40% of PE fund firm

STEEL-TO-PROPERTY conglomerate CITIC Pacific said yesterday that China's sovereign wealth fund has bought a 40 percent stake in its private equity fund management unit, CITIC Capital.

No financial details were given.

Last month, sources told Reuters that the US$200 billion China Investment Corp had agreed to invest HK$2 billion (US$259 million) for 40 percent of CITIC Capital.

"Restructuring of certain assets is another way to generate returns for our shareholders," Chang Zhenming, who was appointed chairman of CITIC Pacific in April, said in a statement announcing the conglomerate's first-half results.

Following the deal, CITIC Pacific will see its 50 percent stake in CITIC Capital cut to 27.5 percent, while CIC's stake will rise to 40 percent, CITIC Pacific said.

CITIC Capital is well known for its expertise in restructuring big Chinese state-owned enterprises including Harbin Pharmaceutical Group, one of China's biggest drug companies, and Fushun Excavator Co Ltd, the country's largest hydraulic crawler crane manufacturer.

The alliance with CITIC Capital is CIC's first investment in a Chinese asset manager.

This is the latest asset sale by CITIC Pacific, which is reeling from nearly US$2 billion in foreign exchange-related losses suffered last year.

Last week, CITIC Pacific said it was selling a 12.5 percent stake in Hong Kong's flagship carrier Cathay Pacific Airways to Air China and a separate 2 percent stake to Swire Pacific.

The conglomerate reported yesterday a 43.4 percent drop in first-half net profit to HK$2.47 billion, from HK$4.36 billion a year earlier.

CITIC Pacific shares were trading 2.35 percent higher at HK$24.00 after the announcement yesterday, bringing gains for the year to date to 65 percent.


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