CIC to Avoid Defense, Casino, and Alcohol Investments

The $300 billion sovereign wealth fund's supervisory board Chairman Jin Liqun said at an address at the Super Return Asia 2010 conference that the CIC will not invest in areas with repuational risk -- such as defense, casino and alcohol-related sectors -- and sees more room to collaborate with global institutions.

(September 28, 2010) — The $300 billion China Investment Corp (CIC) will avoid investing in defense as well as casino and alcohol-related sectors, Reuters is reporting.

“We will not do anything that has a reputational risk for us,” CIC supervisory board Chairman Jin Liqun said at an address at the Super Return Asia 2010 conference, according to the news agency. He added that China’s private equity industry is set for growth in the years ahead, buoyed by a strong legal system and exit opportunities through initial public offerings.

Jin explained that China is on the road to becoming one of the most exciting markets for private equity in the world within the next decade. “Sovereign wealth funds such as the CIC are working on the basis on very high corporate governance,” he said, adding that the Chinese government has urged cross-border acquisitions and greater private participation following the financial crisis.

Jin reportedly declined to comment about whether the Chinese sovereign wealth fund will be involved in Sinochem’s likely counterbid for Potash Corp, the world’s largest fertilizer producer, in an effort to thwart BHP Billiton’s $39.6 billion hostile takeover offer for the Canadian company. China’s possible bid for Potash via the CIC reflects the priority that surplus-heavy countries are placing in pursuing strategic national goals by securing energy and food needs or buying industries they home to develop domestically, Reuters reported.

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