China Investment Corp, a $200 billion sovereign wealth fund, and state-owned China Development Bank are both in talks to buy into CITIC Capital Holdings Ltd, an official newspaper said on Thursday.
Three parties including CIC, CDB and CITIC Group, which is directly led by the State Council, China’s cabinet, are involved in the talks, which have been ongoing for more than half a year, the Shanghai Securities News reported, citing a source close to the deal. The talks have seen “substantial progress” but no financial details about a new shareholding structure have been fixed, the newspaper said, citing the source.
On Wednesday, Reuters disclosed CIC’s interest to buy up to 50% of CITIC Capital, an investment firm described by local media as ‘China’s Blackstone’. Steel-to-property conglomerate CITIC Pacific and CITIC International Financial Holdings Ltd each own half of CITIC Capital. Both CITIC Pacific and CITIC International Financial are controlled by Beijing-based CITIC Group.
“From the strategic perspective, this is a very rare case for CIC to team up with CDB and CITIC Group to jointly do a deal,” the newspaper quoted the source as saying. “Capitalization of CITIC Capital is relatively small to CIC and CDB, so it is easy for CIC and CDB to gain important positions in the firm,” the source told Shanghai Securities News.
CDB, previously known as one of China’s three policy lenders, was transformed into a commercial lender late last year, with focus on loan support to major state-owned enterprises, in particular when they go abroad for deals.
CDB has also been actively involved in developments of several local industrial investment funds in the past two years. CITIC Capital currently manages over $1.6 billion of assets and often teams up with foreign funds for joint buyout deals. (Reuters)