CIC to take stronger investment role

Sovereign wealth fund China Investment Corporation (CIC) will look to co-invest with overseas private-equity managers, in a fundamental change to to their investment strategy, The Wall Street Journal reported, citing an anonymous source close to the fund. CIC is negotiating a position as Canada’s Brookfield Asset Management’s (BAM.NYSE, BAM.A.TSE) co-investor in a forestry assets investment deal, with CIC contributing up to US$300 million. In previous transactions with overseas funds, CIC acted only in a limited partner capacity. Acting as a co-investor would bring the fund into a more active role in its overseas investments. Co-investors have more control over funds. They may also benefit from higher returns than a limited partner, as fund-management fees are not payable. However, such investors may also be subject to more regulatory red tape in certain jurisdictions. Investments from a government-associated co-investor could also invite a higher level of scrutiny from the countries in which they invest.