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China fund says it has no political agenda
China Investment Corp is turning its back on countries that are suspicious of sovereign wealth funds, Gao Xiqing, CIC's president and chief investment officer, said on Friday.
- Reuters
- Published: 00:01 June 14, 2008
Beijing: China Investment Corp is turning its back on countries that are suspicious of sovereign wealth funds, Gao Xiqing, CIC's president and chief investment officer, said on Friday.
Gao told a mergers and acquisitions conference that CIC "has a problem" that countries are defining more industries as strategically important.
"Some think we are from a Cold War area and Red China. We are still regarded very much by many countries as a potential threat," Gao, speaking in English, said. "We are trying to get financial returns. If there is too much political pressure and too much unpredictability, you just go away."
"Fortunately, there are more than 200 countries in the world. And fortunately, there are many countries who are happy with us," he added.
Gao said CIC had walk-ed away from a potential investment in an unnamed country after its leaders flagged political concerns. "We then stop-ped reviewing that case," he said.
CIC, which was set up last September to earn higher returns on a portion of China's official reserves, would soon start making investments in global equities and bonds through fund managers that it is in the process of appointing, Gao said.
In that connection, a source said last week that CIC was in final talks to entrust each of eight overseas asset managers with $250-$600 million worth of fixed income funds focused on emerging markets.
CIC expects to have $80-$90 billion of its total assets of $200 billion available for overseas investment.
Broad interests
Gao said CIC had a broad investment horizon and had been looking at various opportunities across the globe.
"We've been studying all the laws and regulations in major countries," he said.
"Sure, we are looking at energy. We are looking at clean energy and environmentally friendly investment. [We are] looking at everything cross-border except for casinos, tobacco companies or machine gun companies," he added.
CIC has ploughed $3.2 billion into a private equity fund set up by New York-based JC Flowers & Co that will target financial institutions.
It took a $3 billion equity stake in private equity house Blackstone Group before its initial public offering last year and bought a $5 billion stake in Morgan Stanley.
Gao reiterated that CIC was exclusively commercially driven. It was a passive financial investor that does not seek representation on the boards of its potential targets.
He recognised that the fund needed to become more transparent but said publicity was not a goal it was seeking. Lacking experience and expertise, CIC would proceed humbly, he added.
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