China Investment Corporation Restructured Direct Investment Strategy

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For years, the China Investment Corporation (CIC) has accumulated a substantial pool of sovereign wealth capital, but encountered a series of hiccups on getting its direct investment program fully functioning. The Asian sovereign wealth fund placed significant bets in Canadian oil sands, infrastructure, utilities and U.S. financials.

At the start of 2015, CIC formed a unit called CIC Capital whose focus is to go after direct equity investments.

When some initial direct investments exhibited tepid performance, it fostered some level of disillusionment with a number of CIC’s government higher ups. The CIC did not give up on direct investing, allocating capital to companies such as Teck Resources, Bumi Resources, Thames Water and Visa. In February 2012, CIC invested US$ 150 million as a cornerstone investor in Canadian oil explorer Sunshine Oilsands Ltd, along with China Petroleum & Chemical Corp (Sinopec) and Washington-based asset manager EIG Global Energy Partners – boasting a US$ 570 million initial public offering. After a March 5th close, Sunshine Oilsands Ltd’s market capitalization has fallen to C$ 292.15 million. According to SWFI’s Sovereign Wealth Fund Transaction Database, the CIC trails behind its peers Singapore’s Temasek Holdings and GIC Private Limited when it came to the number of completed direct deals in 2014.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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