(May 13, 2010) — State-owned China Investment Corp (CIC), the world’s biggest pool of capital, has agreed to invest $1.23 billion in Canadian oil sands giant Penn West.
The deal would give China’s sovereign wealth fund a stake in the world’s largest crude deposits outside Saudi Arabia. It reflects the latest in a string of Canadian companies turning to China, the world’s third largest economy, for funding.
The CIC will pay C$312 million up front and C$505 million of Penn West’s future expenses for a 45% stake in the venture, the Penn West trust said today in a statement. According to the release, Penn West, Canada’s No. 2 energy trust, will contribute C$1.8 billion in assets to the venture, which will develop 237,000 acres of oil- sands properties in the Peace River area of northern Alberta. The Calgary-based trust said the Chinese company’s support will assist in moving the project from the current resource-appraisal phase through to commercial-scale development and production.
The deal is due to close on June 1, subject to regulatory approval.
Last year, the CIC said it had $110 billion for oversees investments, focusing on commodities companies and property to protect against accelerating inflation, Bloomberg reported.
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