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China – Qatari Sovereign Wealth Fund Teams Up With Citic Group To Invest USD 10bn into State.

6 November, 2014

 

Legal News & Analysis – Asia Pacific – China – International Trade

 

The Qatar Investment Authority (QIA), which operates the country’s sovereign wealth fund, has teamed up with Chinese state-backed investment firm Citic Group to create a SD 10bn fund that will invest in China, its chief executive has said.

 

Speaking at an investment forum hosted by QIA in Beijing, Ahmed Al Sayed also told reporters that the fund planned to expand its Chinese office as part of plans to invest between USD 15bn and USD 20bn in Asia over the next five years.

 

“As a global fund, we need to diversify asset allocations and geographical location,” said Al Sayed, in comments reported by Reuters.

 

Adding that many companies in China had solid “fundamentals” that made them attractive as long-term investment propositions, Al Sayed said that there were “a lot of companies here, a lot of assets … which give you long-term sustainable returns”.

 

QIA and Citic will each own a 50% stake in the fund, according to the terms of a memorandum of understanding signed by each of the institutions. According to Al Sayed, possible areas of investment include China’s property, infrastructure and healthcare sectors but the QIA would look at “any promising investment”.

 

The QIA was set up in 2005 to invest surplus revenue from Qatar’s oil and natural gas supplies in non-energy and international markets, as part of its stated strategy to minimise the risks of Qatar’s reliance on energy prices. It holds an estimated £170bn in assets. Among its highest profile investments are its stakes in Barclays Bank, the Volkswagen Group and Sainsbury’s, and its ownership of the London department store Harrods.

 

The fund is also an investor in Citic Capital Holdings Ltd, an alternative investment company backed by Citic Group.

 

This week, the Chinese and Qatari central banks announced that they had entered into a three-year reciprocal currency swap agreement worth 35bn renminbi (GBP 3.6bn). The swap line will “facilitate [renminbi] trade and investment and provide liquidity and support for financial stability”, according to a statement from Qatar Central Bank.

 

Pinsent Masons

 

For further information, please contact:

 

Richard Laudy, Partner, Pinsent Masons

richard.laudy@pinsentmasons.com

 

Nick Ogden, Partner, Pinsent Masons

nick.ogden@pinsentmasons.com

 

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