CITIC Capital To Expand Aborad After CIC Injection

BEIJING (Reuters) – CITIC Capital, the flagship investment arm of state-owned CITIC Group, will ramp up its foreign expansion plans after receiving a major investment from China’s sovereign fund, the firm’s CEO said on Wednesday.

“To us, CIC’s investment is like to add wings to a tiger,” Zhang Yicheng, chief executive of CITIC Capital, told Reuters on the sidelines of the opening of the Chinese People’s Political Consultative Conference (CPPCC) in Beijing.

CPPCC is China’s top political advisory body and Zhang is a delegate to CPPCC.

“We already have business in the United States and Japan … CIC’s investment would give a great boost to our overseas investment plans,” said Zhang, referring to China Investment Corp (CIC), which is now a major shareholder of CITIC Capital.

CIC, which currently has $300 billion under management, bought a controlling 40 percent stake in CITIC Capital late last year, providing a new platform to the young sovereign fund to expand its investments and tap new business.

At present, CITIC Capital focuses on China deals but it also runs a hedge fund business in Japan, and the firm is also seeking property investment opportunities in the U.S. where house prices fell in the financial crisis.

Lou Jiwei, head of CIC, told an industry forum in Hong Kong in January that the sovereign fund, established in late 2007, wanted to do more deals in Asia, including Japan, than the United States, where it lost bets on Wall Street firms, such as Morgan Stanley (MS.N) and Blackstone Group (BX.N).

MORE FUNDS, MORE DEALS

CITIC Capital is known for its restructuring of big Chinese state-owned enterprises, such as Harbin Pharmaceutical Group, one of China’s biggest drug firms, and Fushun Excavator Co Ltd, the country’s largest manufacturer of hydraulic crawler cranes.

Foreign funds, such as Carlyle [CYL.UL] have complained about the difficulties in securing approvals to buy state-owned firms in the world’s fastest growing major economy.

In February, CITIC Capital announced it had completed raising $925 million for its second buyout fund.

On Wednesday, Zhang said the new buyout fund would purely focus on China deals.

Zhang, who serves as the chairman of China Venture Capital Association, said CITIC Capital is eyeing expansion into emerging markets.

CIC is also eyeing deals in emerging markets including Brazil and Mexico, Lou said in January.

CITIC Capital had been in talks with China’s powerful and fast-expanding National Social Security Fund (NSSF), the country’s national pension fund to launch a yuan-denominated private equity fund, Reuters reported last year.

Zhang said the talks with the NSSF are ongoing.

By Samuel Shen and George Chen

(Editing by Louise Heavens)