China’s $300 billion sovereign fund, China Investment Corp, will not invest in sectors related to defence, casinos or alcohol, it announced on Wednesday. Jin Liqun, the CIC supervisory board chairman, said that it would not invest in anything that might damage its reputation. He also said that China is likely to be “one of the most exciting PR markets in the world.”
(Reuters) – China Investment Corp, China’s $300 billion sovereign fund, will stay clear of investing in defence, casino and alcohol-related sectors, a senior official told a private equity conference on Wednesday.
“We will not do anything that has a reputational risk for us,” CIC supervisory board Chairman Jin Liqun said in an address at the Super Return Asia 2010 conference.
He said the private equity industry in China was set for strong growth in coming years, helped by a sound legal system and attractive exit opportunities through initial public offerings.
“In the next 5-10 years, China promises to be one of the most exciting PE markets in the world … PE investments (have) all the ingredients for rapid growth in China,” he said. Liqun assured the gathering that CIC is making progress and learning mistakes from the past.
“Sovereign wealth funds such as CIC are working on the basis on very high corporate governance,” he said.
He said the general perception about Chinese state owned enterprises was that they are inefficient and loss-making. “But when CIC comes to invest in your country, we are ferociously competitive and efficient,” he added.
CIC has backed some of China’s SOEs’ overseas M&A drives over the years. Many such state-backed takeovers have attracted protests from foreign governments and nationalistic quarters in the target countries.
Liqun declined to comment about whether CIC will play any role in Sinochem’s likely counterbid for Potash Corp in an effort to foil BHP Billiton’s $39.6 billion hostile takeover offer for the Canadian fertilizer company.
But Liqun said CIC will work closely with global institutions to tap opportunities.
‘We expect to expand collaboration in the future as we see many projects that are win-win opportunities,” Liqun added without saying what those opportunities might be.
Liqun said the Chinese government has encouraged cross-border acquisitions after the financial crisis and also has encouraged greater private participation.
“This is an important step in breaking down state monopoly in some sectors zealously guarded by the SOEs,” he added.
(Reporting by Denny Thomas; Editing by Ken Wills)