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CIC to acquire 40% stake in CITIC Capital

The sovereign fund, which already owns a portion of Blackstone's management company, will reportedly pay $258m for new shares in the Hong Kong-based alternative investment firm.

CITIC Capital has confirmed that the $200 billion China Investment Corporation (CIC) is looking to buy a 40 percent stake in the company.

The Hong Kong-based alternative investment firm declined to provide further details.

CIC plans to invest HK$2 billion ($258 million; €182 million) for a 40 percent stake in CITIC Capital by acquiring new shares issued by the firm, sources told Reuters. Such a deal would value CITIC Capital at roughly HK$5 billion.

CITIC Capital is part of the CITIC Group, one of China’s largest financial conglomerates. CITIC Group subsidiaries CITIC Pacific and CITIC International Financial Holdings, both of which are based in Hong Kong, presently own a 50 percent stake each in CITIC Capital.

The two current shareholders in the company are not buying new shares issued by the company and their respective stakes in the company will be diluted to 30 percent, sources told Reuters.

This is not the first time CIC will be buying into an alternative investments manager; it paid around $3 billion for a 9.9 percent stake in The Blackstone Group prior to the firm’s public float in 2007. In October 2008, Blackstone raised the equity limit CIC could own in the publicly listed firm to 12.5 percent, allowing the Chinese sovereign wealth fund to increase its stake.

A CIC spokeswoman declined to comment on its investment policies.

CITIC Capital has been busy on the fundraising trail this year. In May, it teamed with Kazakh fund of funds manager Kazyna Capital Management to form the CITIC-Kazyna Investment Fund I, which will invest in infrastructure in Kazakhstan and China.

Three months prior to that, CITIC Capital held a $500 million first close on its second China-focused buyout fund, whose final target has not been disclosed. In January, the firm closed Capital China Real Estate Investment Fund III on $400 million.

CITIC Capital manages assets of $2 billion across its various funds. It has offices in Hong Kong, Beijing, Shanghai, Tokyo and New York.