China Investment Corp Names New Private Equity Chief

HONG KONG (Reuters) – China Investment Corp, the country’s $200 billion sovereign wealth fund, appointed a new private equity head as part of its latest internal restructuring to boost investment performance, sources told Reuters on Wednesday.

CIC made an internal announcement to its staff late on Tuesday that Hu Bing, who was mainly responsible for CIC’s fixed income investment and trading desk, had been appointed the new head of CIC’s Private Equity Department, said the sources with direct knowledge of the matter.

The sources declined to be identified because they were not authorised to speak to the media. CIC could not be immediately reached for comment.

Previously, CIC’s private equity business was part of its Alternative Investments Department, headed by Zhou Yuan, who is also in charge of two other teams in his department — direct investment and real estate investment.

Zhou, who was UBS’ (UBS.N) (UBSN.VX) senior banker in China between 1994 and 1998, officially took his job as Head of the Alternative Investments Department in January, a senior position with strong support from CIC Chairman Lou Jiwei. 

Zhou will remain in his current position, while Hu will lead the new Private Equity Department, said the sources, adding both Zhou and Hu will directly report to the top management led by Lou and Gao Xiqing, the president of CIC.

“It is a surprise to many people in the industry as Zhou took his current job not too long ago and private equity is certainly a very important part of alternative investment business to any financial firm,” said one source.

“But this also shows CIC really cares about the private equity sector as Hu, now as the head of the new and separate department, has more power and confidence when talking to foreign funds for cooperation,” the source added.

FROM NEW YORK TO BEIJING

Hu, who was educated in the United States and worked in the New York head offices of Lehman Brothers, which later collapsed in the global financial criss, had returned to China early this decade and joined the China Securities Regulatory Commission (CSRC).

He joined CSRC, China’s securities watchdog, as a researcher and was soon promoted to be deputy director-general of Market Supervision Department of the CSRC, according to sources who worked with Hu in the government agency.

Hu, a long-time colleague and ally of Gao, who was vice chairman of the CSRC between 1999 and 2003, joined CIC in late 2007 when Gao was appointed CIC’s president.

CIC currently employs more than 200 people, said the sources.

Despite building up its new and more powerful private equity department, CIC is in no hurry to make any quick or large-scale deals with foreign private equity funds in the deepening financial crisis, said the sources.

CIC, headed by Lou, who was former Vice Finance Minister, has drawn criticism at home over large paper losses on its combined $8.6 billion investments in U.S. private equity company Blackstone Group (BX.N) and Wall Street bank Morgan Stanley (MS.N).

In early 2008, CIC agreed to chip in about 80 percent of a new $4 billion fund launched by J.C. Flowers & Co to invest in troubled U.S. financial assets. Performance of the fund is far below CIC’s expectation, said the sources.

By George Chen