CIC creates investment unit for consumer and industrials

The world’s fourth largest pension fund plans to step up direct investments and overseas projects.

China’s sovereign wealth fund, China Investment Corporation (CIC) announced it has created a new investment unit to focus on the consumer and industrials sectors.

The unit, named Investment Department 2, will be headed by Mi Tao, a director of infrastructure investing at CIC.

CIC has also reshuffled its infrastructure team as it shifts its focus to more direct investments and overseas assets, as reported by PEI’s sister publication, Infrastructure Investor.

CIC, which manages part of China’s foreign exchange reserves, has more than $740 billion in assets, according to its website. The majority of the sovereign wealth fund’s investments are in the financials, consumer and information technology sectors.

According to its latest annual report, 44.1 percent of the funds were invested in stocks, 26.2 percent in private equity and direct investment in commodities, real estate and infrastructure sectors, 14.6 percent in fixed income, 11.5 percent in absolute returns and about 3.6 percent of the funds were held in cash.

Among its private equity fund investments, CIC has made commitments to China and southeast Asia-focused fund RRJ Capital II, the Blackstone Group’s Shanghai Blackstone Equity Investment Partnership (Zhonghua Development Investment Fund), China-based and IT-focused WestSummit China Capital Growth Capital II, the Russian-China Investment Fund and the China-ASEAN Investment Cooperation Fund I, according to PEI Research & Analytics.

CIC’s recent investments include Singapore-based transportation app GrabTaxi. Chinese state-owned chemical company China National Chemical Corporation had also approached CIC to help finance a potential acquisition of Swiss pesticide company Syngenta AG, which would be the biggest Chinese acquisition to date if it goes through at $43 billion.

The SWF set up CIC Capital in January 2015, a new subsidiary that would specialise in overseas direct investments, following the Chinese government’s easing of rules for private Chinese companies that wish to invest abroad. According to CIC’s latest annual report, CIC Capital generated a net return of 5.4 percent as of end 2014 and its portfolio has grown to more than $60 billion since inception.