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Established: 2007
US$ Billion: 190
Origin: Non-commodity
Firm Investment Style: Portfolio
Entity Structure: Corporate
Transparency Rating: 6
Summary:
The China Investment Corporation (CIC) is responsible for managing part of China's foreign exchange reserves with around US$ 200 billion of assets under management. It is modeled similar to Singapore's Temasek Holdings.
Background:
The People's Republic of China currently has around US$1.9 trillion in currency reserves. The need to seek greater returns, increase diversification, and hold less in US currency helped prompt the creation of the CIC. Established in September 29, 2007, the fund has made substantial investments in financial firms. The previous vehicle, state-owned Central Huijin Investment Limited was merged into the new company as a wholly-owned subsidiary company.
Some of the funds are also applied locally to some State Owned Enterprises(SOE) and State-Owned Banks.
The capital of the China Investment Corporation is funded through issuing special treasury bonds. With the approval of the Standing Committee of the 10th National People’s Congress, the Ministry of Finance issued Y1.55 trillion special treasury bonds and used raised funds to purchase foreign reserves (US$200 billion) to be injected into CIC as its registered equity capital. China Investment Corporation has to pay dividends to the State Council as its owner, to cover the cost of these special treasury bonds.
Strategy & Objectives:
The purpose of the China Investment Corporation is to maximize return at acceptable risk tolerance and improve the corporate governance of key state-owned financial institutions. CIC tends to use external money managers and participate in indirect equity holdings through various investment funds. Some of the fund money is being used for helping out certain State Owned Enterprises. They are active in pursuing global resources such as in places like Africa and Australia.
Governance:
The CIC has a Board of Directors which has decision-making authority.
Sovereign Wealth Enterprises:
1. Central Huijin Investment Limited
The State Council wanted to reform and restructure China's major commercial banks, so the Central Huijin Investment Company was created. Established in December 2003, its main purpose was to recapitalize and stabilize China's major state-owned commercial banks. In September 2007, the Ministry of Finance issued special treasury bonds and acquired all the shares of Central Huijin from the People's Bank of China. The acquired shares were injected into China Investment Corporation as part of its initial capital contribution for around US$ 67 billion. However, Central Huijin's principal shareholder rights are exercised by the State Council. It is authorized by the State Council to exercise rights and obligations as an investor in major state-owned financial enterprises on behalf of the Chinese Government. Central Huijin has stakes in a number of financial enterprises including five large commercial banks, two securities companies, one financial holding company, one investment company and one reinsurance company.
This sovereign wealth enterprise makes equity investments in domestic financial institutions. It also owns the China Jianyin Investment Limited which was the original purchaser of the $3 billion stake in the Blackstone Group. It still owns a very large stake in Bank of China Limited.
Source: Central Huijin website
2. Stable Investment Corporation
It is an arm of the China Investment Corporation that invests in short term instruments such as money market funds.
3. Beijing Wonderful Investments Ltd.
Beijing Investments is an arm of the China Investment Corporation that holds interest in Blackstone LP.
4. Fullbloom Investment Corporation
SWE that holds Teck Resources Limited.
7/3/2009
Teck Resources Announces C$1.74 Billion Private Placement
Press Release states that, "Teck Resources Limited ("Teck") (TSX:TCK.A and TCK.B, NYSE:TCK] announced today that China Investment Corporation (”CIC”) has agreed to purchase through a wholly-owned subsidiary 101.3 million Class B subordinate voting shares of Teck for C$17.21 per share. Teck will apply the net proceeds of the transaction to reduce outstanding bank debt. On closing, CIC will indirectly hold approximately 17.5 per cent of Teck’s outstanding Class B subordinate voting shares, representing approximately 17.2 per cent equity and 6.7 per cent voting interests in Teck. Upon completion of the transaction, Teck’s Class A shareholders as a group will hold a 61.8 per cent voting interest in Teck with Temagami Mining Company Ltd. holding a 28.5 per cent voting interest.
Teck President and CEO Don Lindsay said: 'This transaction will have an immediate and very positive effect on Teck’s balance sheet, and represents an attractive opportunity for Teck to establish a relationship with a major Chinese financial investor, with a deep understanding of China, the world’s largest consumer of our principal products.'"
read more: Teck Press Release
6/19/2009
CIC Takes Over Supervision Of China Reinsurance's Management Team
Wall Street Journal reports that, "Separately, CIC said Wednesday it has taken over the supervision of China Reinsurance (Group) Corp.'s management team from the insurance regulator. The information, disclosed in a statement on CIC's Web site, didn't say how China Reinsurance's daily operations will be supervised following the change.
CIC's news department told Dow Jones Newswires the move gives CIC responsibility for naming senior managers at China Reinsurance.
Central Huijin Investment Co., an investment arm of CIC, injected US$4 billion into China Reinsurance in April 2007, helping the country's largest reinsurer to restructure into a corporation. Central Huijin owns 85.5% of China Reinsurance, as a result of the recapitalization, and the Ministry of Finance owns the remaining 14.5%. Central Huijin has also made capital injections in China's biggest commercial banks and a number of other major state-controlled financial institutions. It has stated, however, it won't intervene in the daily operations of the institutions it controls. "
read more: Wall Street Journal
5/26/2009
Central Huijin To Consolidate China Construction Bank Stake
Wall Street Journal reports that, "Central Huijin Investment Co., an investment arm of China's sovereign-wealth fund, said Wednesday it will take over a unit's 9% stake in China Construction Bank Corporation to consolidate its holdings in the large commercial lender. The stake transfer from wholly owned China Jianyin Investment Co. will raise Central Huijin's direct ownership of China Construction Bank to 57% from 48%.
'The stake increase is aimed at strengthening the management of state-owned companies and streamlining the property rights relationship of state-owned enterprises,' Central Huijin said in a statement.
'After the transfer, Huijin will remain the controlling shareholder of China Construction Bank, while Construction Bank will continue to operate as an independent entity. The transfer won't affect the bank's operation.'
The move is subject to approvals from the Ministry of Finance, and the banking and securities regulators.
Central Huijin said it plans to continue increasing its stake in China Construction Bank over the next 12 months. It didn't elaborate."
read more: Wall Street Journal
4/29/2009
China's CIC names new private equity head -sources
Reuters reports that, "China Investment Corporation, the country's $200 billion sovereign wealth fund, appointed a new private equity head as part of its latest restructuring, sources told Reuters on Wednesday. CIC made an internal announcement to its staff late on Tuesday that Hu Bing, who was mainly responsible for CIC's fixed income investment and trading desk, had been appointed the new head of CIC's Private Equity Department, said the sources with direct knowledge of the matter."
read more: Reuters
4/21/2009
Daimler held talks with China wealth fund
Forbes reports that, "German carmaker Daimler has held talks with Chinese sovereign wealth fund CIC over a possible investment by Beijing, its chief executive told the Frankfurter Allgemeine Zeitung newspaper.
'We have met several times in the past, and talks have not in principle been broken off,' Chief Executive Dieter Zetsche told the paper."
read more: Forbes
4/18/2009
China Investment Corporation says considering investments in Europe
Reuters reports that, "China's sovereign wealth fund will actively consider investment opportunities in Europe and has identified many potential targets there, its chairman said on Saturday. Lou Jiwei, chairman of China Investment Corp (CIC), said the CIC had not invested at all in euro zone countries last year because of financial protectionism, but that now, with European countries easing scrutiny over investments by sovereign wealth funds, it was more of an option."
read more: Reuters
3/31/2009
China's CIC invests $800 million in Morgan Stanley fund: source
Reuters reports that, "China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, has committed $800 million in a new $6 billion global real estate fund to be managed by Wall Street bank Morgan Stanley, according to a person who has direct knowledge of the deal.
Earlier on Tuesday, sources told Reuters that Morgan Stanley, partly invested by CIC, is close to raising $6 billion for a new global property fund, falling short of its earlier target of $10 billion.
The Morgan Stanley Real Estate Fund VII Global, the latest in the Wall Street bank's series of international property investment funds, began raising money from institutional investors in early 2008."
read more: Reuters
3/22/2009
China Investment Corporation focuses on real economy
CCTV reports "the chairman of China's sovereign wealth fund says there are long-term investment opportunities emerging from the current global financial crisis. But he says the fund will shy away from some riskier financial derivatives.
At the China Development Forum on Saturday, Lou Jiwei, the chairman of the China Investment Corporation, said the global economy is facing recession. And he added that it's not sustainable for the global financial system to rely too heavily on US dollar assets.
Lou Jiwei, Chairman of China Investment Corporation, said, 'We see long-term investment opportunities and we see short-term price-value deviation. We will invest in a very prudent manner. We will no long touch those financial derivatives that are derived too far away from the real economy.'"
read more: CCTV
2/19/2009
CIC looking at natural resources
IHT reports that, "the $200 billion Chinese sovereign wealth fund is shifting its investment focus to natural resources, fixed income and real estate after having made losing bets on high-profile U.S. financial firms, people familiar with its strategy said. China Investment Corp., headed by a former Vice Finance Minister Lou Jiwei, has drawn criticism at home over large paper losses on its combined $8.6 billion investments in the U.S. private equity giant Blackstone Group and the Wall Street bank Morgan Stanley."
read more: IHT
2/18/2009
Fortescue talking to CIC
According to Market Watch, "Australian iron ore producer Fortescue Metals Group said Wednesday it its holding investment-related talks with Anglo American PLC and China's sovereign wealth fund , China Investment Corp., but noted the discussions were preliminary."
read more: Market Watch
1/16/2009
China wealth fund says investing in domestic banks
Reuters reports that, "China's sovereign wealth fund has been buying shares in the country's three largest commercial banks, the fund's chairman Lou Jiwei told reporters on Friday."
read more: Reuters
1/6/2009
China's sovereign wealth fund to slow investment
AFP reports that, "China's 200-billion-dollar sovereign wealth fund will slow down its investing pace after being stung by major investments that turned sour in the world financial crisis, a report said Tuesday.
China Investment Corp (CIC) has been adjusting its investment plans since September, said Zhang Hongli, the company's vice executive president, according to the official Shanghai Securities News.
The moves came amid turbulence on global financial markets as the world faces recession.
'Now, cash is king and as far as possible we will refrain from making investments,' Zhang was quoted as saying by the newspaper."
read more: AFP
12/5/2008
No plans to increase size of China wealth fund CIC
The Guardian reports that, "Beijing has no plans at present to increase the size of China Investment Corp, the country's $200 billion sovereign wealth fund, Assistant Finance Minister Zhu Guangyao said on Friday. Zhu, speaking at a news conference after two days of high-level Sino-American talks, said CIC was still in its start-up phase.
'At present, according to my understanding, CIC has made no request to increase its equity capital base,' Zhu said."
read more: The Guardian
11/26/2008
CIC Official: Investment Strategy Doesn't Rule Out Mineral Assets
China's US$200 billion sovereign wealth fund doesn't exclude mineral assets in its consideration of global asset allocation, but will take measures to control any risks associated with its investments, an executive at China Investment Corp. said Tuesday. "Based on our asset allocation strategy, mineral assets are part of the consideration," the executive, who declined to be named, told Dow Jones Newswires when asked if CIC is interested in buying stakes in mineral giants such as Rio Tinto PLC. This comes after BHP Billiton Ltd.'s (BHP) board said Tuesday BHP has dropped its bid for Rio Tinto, because it no longer believes completion of the offer for Rio Tinto would be in the best interest of BHP shareholders.
read more: CNN
11/10/2008
CIC to buy more of Blackstone Group
Forbes reports that, "increasing one's stake in a sliding stock is a common tactic among retail investors to reduce the average cost of a money-losing investment. China’s premier sovereign wealth fund has now opted to follow the “street smart” crowd, raising its interest in the Blackstone Group in the hope of polishing its investment record vis-a-vis the U.S. investment firm.
According to a recent U.S. Securities and Exchange Commission filing, China Investment Corp. and Blackstone Group entered into an agreement Thursday that allows CIC immediately to increase its stake in Blackstone to 12.5%, having initially been limited to 9.9%. Blackstone also agreed that the additional shares bought by CIC or its affiliates are to be free from restrictions on transferal set forth in the original agreement, signed in May last year. Blackstone initially required the Chinese sovereign fund to hold onto its shares for at least four years."
read more: Forbes
11/5/2008
Agricultural Bank of China Gets $19 Billion Bailout
Bloomberg reports that, "Agricultural Bank of China, the nation's third-largest, has received a $19 billion cash infusion from the government, paving the way for the bank to sell shares to strategic investors and the public. Agricultural Bank signed the bailout agreement with China Investment Corp., the nation's $200 billion sovereign wealth fund, in Beijing today. CIC will own half of Agricultural Bank, while the Ministry of Finance will own the rest."
read more: Bloomberg
10/16/2008
CIC intends to hike stake in Blackstone-source
According to Reuters, "Sovereign wealth fund China Investment Corporation intends to raise its stake in private equity firm Blackstone Group from 9.9 percent to 12.5 percent by purchasing shares on the open market, a source familiar with the matter said on Thursday. CIC bought its original stake in Blackstone just before the company's $31-a-share initial public offering in June 2007, but has seen the value of its investment sink. Blackstone's shares are currently trading at less than a third of the IPO price."
read more: Thomson Reuters
10/14/2008
China Investment Corporation says won't lose money on U.S. fund freeze
China Investment Corporation, the country's sovereign wealth fund, said on Wednesday that it had ordered a full withdrawal of its cash from a troubled U.S. money market account before it was frozen. Indeed, it had received written confirmation that it would receive its principal and interest, the wealth fund said. The Reserve Primary Fund REPXX.O suspended redemptions last month when it became the first money market fund in 14 years to "break the buck", the par value of its shares falling to $0.97, because of losses on debt issued by Lehman Brothers. A U.S. regulatory filing showed that Stable Investment Corp, an arm of CIC, was the biggest institutional shareholder in the fund as of Sept. 1, with a stake of potentially more than $5 billion.
read more: Thomson Reuters
9/24/2008
China Huijin increases stake in three top commercial lenders
Xinhua states, "According to announcements released by the banks on Tuesday evening, Huijin has increased shareholdings of 2 million shares for each bank through shares purchase on the Shanghai Stock Exchange.
China Construction Bank (CCB) said that following the acquisition, Huijin holds 152,844,297,904 shares of the CCB (including 2,000,000 A-shares and 152,842,297,904 H-shares), representing approximately 65.405 percent, up from 65.4041 percent, of the total issued share capital of the bank.
The Industrial and Commercial Bank of China said Huijin now holds 118,008,174,032 shares in the bank after the acquisition, increasing its stake in the country's top lender from 35.3292 percent to 35.3298 percent.
The Bank of China said the government investment arm now holds 171,327,404,740 shares in the bank after the purchase, increasing its stake from 67.4937 percent to 67.4945 percent."
read more: Xinhua
9/19/2008
State investment arm to shore up three Chinese lenders' shares with stock-buying plan
The Central Huijin Investment Co.,Ltd., an investment arm of the Chinese government, said Thursday it would buy the shares of three major Chinese lenders on the secondary market to shore up their share prices amid stock market slumps.
The company said it would buy the shares of the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank and operations had started on Thursday. Central Huijin was set up in 2002 with a mission to reform state-owned banks burdened with a high ratio of non-performing loans.
read more: Xinhua
9/1/2008
China Investment Corporation looks to invest in Japanese stock market
According to the The Mainichi Daily News, "the China Investment Corporation (CIC), a sovereign wealth fund owned by the Chinese government, will begin investing in the Japanese stock market, sources told the Mainichi Shimbun on Saturday.
CIC plans to invest about one-third of its assets, or some 67 billion dollars (about 7.3 trillion yen) in foreign stock markets including the Japanese stock market. It will -- in principle -- pursue "pure" investments in the Japanese market without seeking controlling interests in corporations. While CIC's new investment strategy is expected to provide a shot in the arm to the Japanese securities market, CIC's investments in Japanese stocks could potentially be a source of concern to Japanese corporations.
CIC has entered the final stages of negotiations with Japanese banks to establish yen-denominated settlement accounts, according to sources familiar with the negotiations. A Chinese government-affiliated think tank has already surveyed Japanese financial institutions to find out how corporations would react if China were to acquire up to 20 percent of their outstanding shares. CIC has also been trying to recruit fund managers with expertise in the Japanese market, and is apparently contemplating investments in natural resources-related firms and corporations with a strong presence in the environmental technology sector."
read more: The Mainichi Daily News
7/22/2008
CIC continues to look at banks, courts HSBC
The IHT says, "The Sunday Telegraph said bank chairman Stephen Green had met officials from the China Investment Corporation several times in recent months, discussing among other things the possibility of the fund buying HSBC's shares on the open market."
read more: International Herald Tribune
6/3/2008
CIC tries to have transparency
According to the Financial Times, "The head of China's $200bn sovereign wealth fund said on Tuesday the fund was trying hard to adapt to international demands for greater transparency even though this was contrary to the country's ancient historical traditions.
'Our government has never been transparent for 5,000 years' said Gao Xiqing, president and chief investment officer of China Investment Corporation. 'Now we are told we need to be transparent and we are trying.'"
read more: Financial Times
4/25/2008
CIC raises budget to $90bn
According to the Financial Times, "China's $200bn sovereign wealth fund now has as much as $90bn to spend on assets abroad, an increase of more than 30%, its president and chief investment officer said on Wednesday. The China Investment Corporation initially had about $66bn for investment offshore but Gao Xiqing said it had changed its allocation after the government reduced the amount needed to restructure some struggling state-owned financial institutions. Gao said most of CIC's enlarged offshore allocation would go to external managers to invest in equities, fixed income products and alternative investments."
read more: Financial Times
4/10/2008
Total CEO: Chinese sovereign fund, SAFE holds around 1.3 percent
Dow Jones writes that, "Total SA Chief Executive Christophe de Margerie Thursday said the stake taken in the company by a Chinese sovereign fund is around 1.3%." Is SAFE trying to establish itself as a sovereign investor?
read more: Dow Jones
3/30/2008
CIC in discussion to buy Dresdner Bank
Europe's biggest insurer Allianz SE is holding "intensive" negotiations with Beijing's state-owned China Investment Corporation (CIC) over the possible sale of its banking offshoot Dresdner Bank, the German media reported Thursday. Citing industry sources, the Munich daily Sueddeutsche Zeitung reported that CIC is seeking to acquire both Dresdner's retail business as well as its investment banking operations.
read more: Earth Times
3/6/2008
CIC interested in Swedish government's 19.9% stake in Nordrea
The China Investment Corporation is interested in buying the Swedish government's 19.9 per cent stake in Nordea AB. 'We have come to know that the Swedish state is privatising Sweden's biggest bank and we are going to take a closer look,' said China Investment's Gao Xiqing.
read more: Forbes
3/1/2008
China's Pension Fund
According to Reuters, "Zheng Bingwen of the Chinese Academy of Social Sciences, the government's top think-tank, said China should launch a fund similar to Norway's Government Pension Fund -- Global, which is one of the world's biggest pension funds and invests Norway's oil and gas revenues for future generations.
The existing China National Social Security Fund (NSSF), a "fund of last resort" for China's patchwork of chronically underfunded provincial pension schemes, should also boost its overseas investments with a focus on markets in neighboring countries, he said.
The NSSF had assets of 516.2 billion yuan ($72.53 billion) at the end of last year, including overseas equities investments of $1.66 billion, data released at the forum on Thursday showed."
read more: Reuters
2/24/2008
CIC turns focus on Japan
The China Investment Corporation sovereign announced plans to buy as much as $10 billion in Japanese stocks and may consider purchasing a large stake in oil and gas developer Inpex Holdings Inc.
Initially, the fund will focus on stocks centered in Tokyo and eventually move toward direct investments, such as real estate.
read more: Reuters
2/8/2008
$4 Billion In J.C. Flowers Fund - Investing Indirectly
The CIC plans to invest $4 Billion into the J.C. Flowers Fund, a private equity fund headed by former Goldman Sachs trader, Christopher Flowers. The investment will be aimed at distressed financial institutions.
CIC Site
State Owned Assets Supervision and Administration Commission of the State Council (SASAC)-English
| Company |
Country |
Industry |
% Ownership |
Comments |
| Teck Resources Limited |
Canada |
Mining |
17.2% |
|
| Blackstone Group |
United States |
Financials |
9.9% |
9.9% was a $3 Billion Purchase, Set to purchase up to 12.5% |
| Morgan Stanley |
United States |
Financials |
9.9% |
|
| Visa |
United States |
Financials |
|
Around $100 Million from the IPO |
|
| Company |
Country |
Type |
% Ownership |
Comments |
| JC Flowers PE Fund |
United States |
PE Fund |
~80% |
$4 Billion US PE Fund |
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1. All figures quoted are from official sources, or, where the institutions concerned do not issue statistics of their holdings, from other publicly available sources.
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