CIC, Mongolia-focused Iron Mining International Ltd. Reach Deal

According to the WSJ, “China Investment Corporation has reached a deal to invest up to $700 million in Mongolia-focused Iron Mining International Ltd., the latest move by the sovereign wealth fund to plow cash into commodities.

CIC is rapidly deploying its capital this year to try to catch the upside of a global economic recovery by buying into natural resources and property assets. On Wednesday, CIC Chairman Lou Jiwei told a forum that CIC has allocated $110 billion for overseas investments and deployed around half. Commodities have been a major focus of the fund’s investing strategy and asset allocation, he said.

Originally, CIC was expected to allocate only about a third of its initial $200 billion in capital, or just $67 billion, for overseas investments. Mr. Lou’s comments indicate that CIC has pumped around $40 billion of its cash hoard into other assets this year after having invested a total of $13.52 billion by the end of 2008, according to data from CIC’s annual report. The terms of CIC’s investment in Iron Mining International involve a $500 million convertible loan, with an option for the company to increase the loan to $700 million, according to people familiar with the situation. The company, formerly known as Hong Kong Lung Ming Investment Holdings Ltd., is planning to raise $1 billion through an initial public offering in Hong Kong during the second quarter of next year, one person said. CIC’s investment is structured so that the loan will become ordinary shares at the time of Iron Mining International’s IPO at a discount to the IPO price, the person said.”

read more: WSJ



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