China’s strategic outbound investments have typically involved buying up natural resource assets to safeguard the nation’s energy security. Things took a different turn in July when it emerged that China Development Bank (CDB), a policy lender, was going to invest US$3 billion in UK-based Barclays Bank.
CDB and Temasek, the investment arm of the Singapore government which is putting in US$1.9 billion, were brought on board to enable Barclays to increase its bid for Dutch bank ABN-AMRO. If the British bank’s bid is successful, CDB and Temasek will take a further US$13.5 billion of shares in the bank, giving them a holding of 10.6%.
CDB’s stake would represent the largest ever overseas investment by a Chinese company.
The deal comes not long after China’s nascent state investment agency – tasked with managing some of the country’s foreign exchange reserves – spent US$3 billion on a stake in US private equity firm Blackstone.
With Blackstone advising CDB during the negotiations, it was suggested that the two deals were linked, although this was quickly denied. But there is no denying that the deals are part of a trend that will see more Chinese capital find its way into global assets.
CDB’s recent activity would appear to confirm this. Set up as a source of funding for state-backed infrastructure projects, CDB now combines shoring up state-owned enterprises with work of a more international flavor.
Its reported investments include US$4 billion for a Venezuelan state infrastructure fund and a US$5 billion China Africa Development Fund that will support Chinese firms in Africa, particularly those involved in oil and minerals.
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