China Investment Corp (CIC, 中國投資公司), China’s US$200 billion sovereign wealth fund, said yesterday that it had agreed to take a significant stake in Hong Kong-based commodities firm Noble Group (來寶集團).
The investment in Noble — which has interests in a range of raw materials from coal and iron ore to soybeans and sugar — will help broaden CIC’s portfolio and reflects Beijing’s ongoing thirst for natural resources.
“As an investment company, you certainly have to diversify. It is impossible to put all your assets into one basket,” CIC spokesman Wang Shuilin (王水林) said.
Singapore-listed Noble said in a statement posted on its Web site that it would sell 573 million shares in a private placement to CIC for US$850 million.
The placement comprises 438 million new shares to be issued by Noble and 135 million existing shares indirectly held by “trusts associated with the interests” of chief executive Richard Elman, the statement said.
The price, at S$2.10 (US$1.50) a share, represents a discount of around 7.3 percent to the weighted average price of shares traded on Sept. 14 and Sept. 15 before trading was suspended, it said.
Both sides said the deal required final approval from both boards of directors.
CIC’s total stake in Noble Group will rise to 14.9 percent after the placement is completed, Dow Jones Newswires reported yesterday, citing an unnamed source familiar with the matter.
Noble said the new placement represented 12.9 percent of the group, indicating that CIC was vastly boosting its stake.
The partnership between the two firms will see both “jointly [invest] in infrastructure assets and supply chain management related to agricultural commodities,” Noble said.
The company added that the newly issued shares would give it the “additional capital to pursue strategic investments in key agricultural markets globally.”
Noble’s current agricultural activities include farm production in Argentina, Uruguay and Brazil, as well as crushing plants and sugar refineries. It operates five port facilities throughout South America.
CIC was set up in 2007 to help China find more lucrative ways to place its massive foreign exchange reserves, which stood at US$2.13 trillion at the end of June and are parked mainly in low-yield instruments such as US Treasury bonds.
In two of its most high-profile investments, CIC pumped US$5 billion into US bank Morgan Stanley in December 2007, and owns more than 10 percent of private-equity firm Blackstone.
In its first annual report released last month, the company said it lost US$6.7 billion in its global investment portfolio last year.
Overall investment returns were US$24 billion due to its wholly owned unit Central Huijin Investment Co (中央匯金投資公司), the controlling shareholder of state-run Chinese banks. Total assets stood at US$297.5 billion at the end of last year.
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