China sets up fund to bankroll corporate takeovers

February 22, 2012 by · Leave a Comment
Filed under: Global News 

No surprise that China is going to start being more aggressive with their large FX reserves.  This fund will be capitalized with $1.9 billion to start.  It will be very interesting to see where this fund starts deploying their cash in different markets.   If I had such a large base of reserves, I would want to hedge in a manner that protected my investment.  I think we will see this invested in productive assets like “stuff” not so much fiat.

One of the investments cited in the article is a  large water & sewer in the United Kingdom.  We will see more investments along those lines in my opinion.

DW: Boasting $3.2 trillion in foreign currency reserves, China has created a new fund aimed at financing takeover bids abroad. The fund also seeks to boost China’s currency in global financial markets.  In its drive to step up overseas investment, the Chinese government has set up a new fund worth 12 billion yuan ($1.9 billion), Shanghai International Group said in a statement Friday.

Shanghai International said it was responsible for running the fund, describing it as China’s “biggest ever fund of its kind.”

“The yuan-backed fund will help domestic companies go abroad in seeking more investment opportunities,” China’s central bank deputy governor Liu Shiyu was quoted by the official Shanghai Daily newspaper as saying.

The fund is planned to grow to 50 billion yuan, and can be boosted to 150 billion yuan through loans and bond issues.  Apart from financing overseas acquisitions, it is also intended to promote greater use of the Chinese currency yuan – also known as renminbi – in foreign transactions.

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