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SAFE Investment Co of China buys small stake in BP

British energy giant BP has confirmed that the buyer of just under 1 percent of its shares is a Hong Kong branch of China’s State Administration of Foreign Exchange, Chinese media said yesterday.

A BP spokesperson in charge of global investor relations said the buyer was SAFE Investment Co, Ltd, formed in 1997 with a registered capital of HK$100 million (US$13 million), the Caijing magazine said.

The spokesperson did not disclose any financial details of the deal. But it could be worth more than US$2 billion based on BP’s current market capitalization of £104 billion (US$204 billion).

The investment is the latest indication that China is becoming an increasingly important global investor and that it has already begun focusing on the world’s most recognizable brands.

A spokesman for BP in London confirmed the investment on Tuesday, saying that over the last six months a Chinese entity had acquired a 1 percent stake in the firm.

“We are a publicly traded company, and we welcome investments,” the spokesman, David Nicholas, said by telephone, although he did not identify the investor.

SAFE, in charge of the world’s largest forex reserves that topped US$1.68 trillion at the end of last month, used to park most of its investment in safe but low-yield assets. With the weakening of the US dollar and the establishment of the China Investment Corp last year, its investment is turning more aggressive in search of higher returns.

Chancellor of the Exchequer Alistair Darling said in Beijing on Tuesday: “We welcome the creation of the China sovereign wealth fund and its potential for investing in our country.”
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