CIC launches overseas direct investment arm
CIC Capital, an overseas direct investment arm of sovereign wealth fund China Investment Corporation (CIC), has begun operations and could have in excess of $40 billion put at its disposal.
Dawei Gu, a director in change of overseas investment at the National Development and Reform Commission (NDRC), said in a press conference in Beijing that the new investment entity had gained regulatory clearance.
CIC Capital's investment pool is expected to be larger than the $40 billion Silk Road fund, established in November last year. The Silk Road fund, which identified CIC as one of its investors, targets infrastructure businesses across Asia, Europe and Africa.
CIC Capital was set up in January and has a remit to support Chinese companies looking to go overseas, with a particular focus on infrastructure and agriculture. It had registered capital of $5 billion, provided by its parent. The fund size will be increased through various channels, Xuedong Ding, chairman and CEO of CIC - and also chairman of CIC Capital - said in a media interview in March.
In addition to CIC Capital, the sovereign wealth fund has two wholly-owned subsidiaries: Central Huijin holds controlling stakes in key state-owned financial institutions, while CIC International focuses on overseas assets.
CIC posted a 9.3% return on its international portfolio in 2013 as strong stock market performance saw the sovereign fund's exposure to public equities rise at the expense of other assets classes, including long-term investments like private equity. CIC has yet to release its 2014 annual report.
CIC was set up in 2007 with RMB1.55 trillion ($250 billion) in special bonds issued by the Ministry of Finance, which were used to acquire approximately $200 billion of China's foreign exchange reserves.
China's State Council has released guidelines intended to boost international cooperation in industrial and equipment manufacturing industries, prompting the creation of several investment funds. Apart from CIC Capital and the Silk Road fund, the government also also launched the China-Africa Development Fund and China-ASEAN Investment Cooperation Fund.
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