Of course, CIC is not only investing overseas. In July 2009, it acquired a 40 percent stake in CITIC Capital, which manages funds investing in the US, Japan and Kazakhstan, but whose primary focus is on China.
While CIC has gone about expanding its overseas private equity portfolio quite rapidly, things are not quite so straightforward for other Chinese institutions.
“As it is hard to move money out of China, other Chinese institutions that want to invest outside the country will face regulatory hurdles as their holdings are in RMB,” says Hubert Tse, a Shanghai-based partner at Boss & Young. “I think CIC is the only Chinese LP to invest wherever it wants to as its core activity is investment.”
Little progress seems to have been made on the National Social Security Fund’s (NSSF) foreign investment ambitions. China’s largest LP in terms of commitments to domestic funds, the fund first sought permission from authorities to invest in foreign private equity funds in May 2009, sources told Reuters at the time. The NSSF, which was only allowed exposure to domestic private equity in 2008, is working on a proposal with China’s ministry of finance and the ministry of human resources and social security, which oversee the pension’s activities.
If the NSSF is granted approval to invest outside China, it would be good news for the asset class. The assets under management of China’s largest pension fund are predicted to rise to RMB1 trillion this year (€108 billion; $146 billion), stretching its 10 percent allocation to the asset class to RMB100 billion, Dai Xianglong, the NSSF’s chairman said at a Shanghai conference, Reuters reported in October 2009.
Regulations permitting, non-Chinese private equity firms have something to look forward to besides jockeying with each other and local firms to raise RMB funds. Just don’t expect a great outflow of capital anytime soon.