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CIC aims to sell assets via the secondary market, sources

say

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CIC looking to optimise investment portfolio, they say

By Kane Wu

HONG KONG, April 30 (Reuters) - Chinese sovereign

investor China Investment Corporation (CIC) is selling about $1

billion of its private equity (PE) investment portfolio in the

secondary market, two people with knowledge of the matter said.

The assets are held in a number of funds managed by eight

U.S. fund managers, including Blackstone Inc ( BX ) and Carlyle

Group ( CG ), said the people.

CIC has tapped U.S. investment bank Evercore ( EVR ) to advise on

the sale and aims to complete the divestments by the end of

June, they said.

The total value of the assets and the sale deadline however

are not fixed and could change depending on market interest and

pricing, said a third person with direct knowledge of the

matter.

Blackstone and Carlyle declined to comment. CIC and Evercore ( EVR )

did not provide any response to requests for comment.

All the sources declined to comment due to the

confidentiality and sensitivity of the matter.

The first two people said CIC started discussing the sale

with advisers and asset managers in late 2024 as part of efforts

to optimise its investment portfolio.

Initially invested in PE funds starting in 2016 and

2017, the $1 billion in assets is coming to the end of its

investment cycle, they said.

The move, however, comes as geopolitical and trade tensions,

especially between Beijing and Washington, have triggered market

turmoil and uncertainty.

The tensions between China and the U.S. have also spilled

into the financial sector as both countries have sharpened

scrutiny of some investments by the other's financial

institutions.

The Financial Times reported last week, citing unidentified

sources, that Chinese state-backed funds, including CIC, were

cutting off new investment in U.S. PE firms in response to

pressure from Beijing. CIC has not commented on the FT article.

Beijing-headquartered CIC, founded in 2007, is mandated to

diversify China's giant foreign exchange holdings via overseas

investments. The U.S. has been the Chinese sovereign fund's

biggest investment destination, according to its past public

disclosures.

During the global financial crisis, CIC invested in Morgan

Stanley ( MS ) and took a minority stake in Blackstone, which it

exited in 2018. CIC is an active investor in U.S. PE funds. The

so-called alternative assets comprise nearly half of its

portfolio.

PE funds typically have an investment cycle of 10 years but

a fall in valuations has made it more difficult for them to exit

investments via initial public offerings (IPOs) or trade sales

since the COVID-19 pandemic.

Potential buyers for the CIC investment portfolio include

other sovereign funds, secondary-focused asset managers, and

private investors such as family offices, said the people,

declining to give details.

The portfolio could be sold altogether or in separate

tranches to different buyers, depending on price negotiations,

they said.

CIC's latest annual report shows the sovereign fund had

$1.33 trillion of assets under management as of December 31,

2023. About 64% of the assets are with external managers.

U.S. stocks made up 60.29% of CIC's overseas public market

equities as of the end of 2023, the annual report shows. Public

equities accounted for 33.13% of its total portfolio.

CIC's annualised cumulative 10-year net return stood at

6.57% at the end of 2023, while its annualised cumulative net

return since inception was 6.23%.