Korea Investment Corp (KIC), South Korea’s sovereign wealth fund, took a minority stake in Hong Kong-based commodity supplier Noble Group Ltd (來寶集團) as the two said they seek to jointly develop infrastructure projects.
KIC bought 59.3 million shares from Noble Holdings Ltd (利寶集團), a group associated with Noble Group founder and chairman Richard Elman, the commodity supplier said yesterday in a statement that did not disclose the price. The purchase, worth about US$108 million at current market prices, equals about 0.9 percent of Noble’s outstanding shares.
“The decision is part of the fund’s effort to diversify its investment portfolio,” Kwon Yong-sung, a spokesman for KIC, said by telephone in Seoul, declining to comment further.
KIC and Noble’s interests converge in Mongolia, which plans to quadruple its rail network over the next decade to speed up development of coal, copper and rare earth deposits that target commodity buyers in South Korea, Japan and China.
Noble gained 1.4 percent to close at S$2.23 in Singapore on April 29. Singapore’s stock exchange was closed yesterday.
Noble has opened an office in Mongolia and is shipping coal from the region as it looks to make further investments in the Asian nation’s deposits, Noble chief executive officer Ricardo Leiman said in February.
Closely held Lotte Engineering & Construction is leading a South Korean group’s bid to build the first 1,100km of rail that Mongolia needs to connect its biggest coal deposit, Tavan Tolgoi, with the existing network.
State-run Korea Resources Corp is also part of a Russo--Japanese-South Korean group bidding to develop one sector of Tavan Tolgoi, which would include adding rail links to connect the deposit with Russia’s Far East ports. The West Tsankhi sector may cost US$7.3 billion to develop, Korea Resources said last month.
Building infrastructure to link Mongolian mineral deposits with Russian ports would allow landlocked Mongolia to diversify its commodity sales outside neighboring China and should benefit companies such as Aspire Mining Ltd that operate in Mongolia, according to Hong Kong-based Quam Asset Management, which has a -Mongolia-focused fund.
Noble last month more than doubled its stake in Aspire, which is developing the Ovoot coking coal project in western Mongolia, to 8.6 percent. Noble has also struck an alliance with Xanadu Mines Ltd, which plans to develop coal fields in eastern and southern Mongolia, the Sydney-based -company said on Feb .3.
Noble had 6.341 billion shares outstanding as of March 31, Stephen Brown, the company’s head of investor relations, said in an e-mailed response to questions yesterday.
Korea’s share purchase was done “on commercial terms, on a willing buyer, willing seller basis,” Brown said.
The investment was the second by an Asian sovereign wealth fund in the energy, food and mining commodity supplier.
China Investment Corp (中國投資公司) bought shares in 2009 to become Noble’s second-largest holder. The Chinese sovereign wealth fund held 14.7 percent of Noble as of March 11, according to filings.