China's state foreign exchange investment company, which will
launch formally before the end of the year, has already hit upon
its first investment opportunity. The recipient will be US private
equity firm the Blackstone Group which will see an investment of
US$3 billion, according to a joint news release.
Wang Jianxi, Chairman of the China Jianyin Investment Limited
(China Jianyin), told Xinhua Monday that under an agreement signed
the day before, the new company would purchase a non-voting stake
in Blackstone, worth less than 10 percent. China Jianyin, a
state-owned investment company, will be merged with the state forex
investment company to boost the credentials of the new entity.
According to the news release, the deal will be closed as
Blackstone launches its four billion US dollars initial public
offering (IPO) in mid June. The Chinese side will be able to buy
shares at 95.5 percent of the IPO price and to hold them for a
period of at least four years.
"We are very pleased to make our very first investment in such a
well-respected firm as Blackstone," said Lou Jiwei, who is
overseeing the new investment company's creation.
"We welcome the state investment company as our stake holder and
are proud to be part of this historic transaction," said Stephen A.
Schwarzman, Chairman and CEO of Blackstone, specifying that US
government approval was not necessary for this deal since it was a
purely commercial venture, worth less than 10 percent of the
company.
As a core investor, the state forex investment company should
profit from Blackstone's private equity firm's investment and rise
in share prices, Wang said. He noted that the forex investment
company may also invest in other global asset management
leaders.
The forex investment company was first announced in March by
Chinese Premier Wen Jiabao?at the closure of the annual
session of China's top legislature and will possess an independence
born from having no affiliation to any specific government
department or institution. However, it will operate under state
supervision. Wen announced its remit as being tasked with making
judicious investments to preserve and increase the value of foreign
exchange reserves.
By the end of March, China's foreign exchange reserves had seen
a 37.36 percent annual rise to top US$1.2 trillion, mainly lying in
low-yielding dollar bonds.
(Xinhua News Agency May 22, 2007)
