Sovereign Wealth Funds
The CIC Funding Saga Continues
Mega-fund's future uncertain.
January 18, 2011
I’ve been chronicling the China Investment Corporation’s funding saga for well over a year now. So it is with sincere reluctance that I sit down to write another post on this topic (see older posts here, here, here, here, here, here and here). In fact, about six months ago, I felt this story had grown so complex and strange that I wrote a tongue-in-cheek “SWF funding soap opera” (…on what must have been a very slow work day for me…). In fact, entire academic papers have been written on the tournament for funds among China’s SWF for the country’s forex reserves.
Well, as it turns out, the soap / saga continues. Apparently, CIC has now invested all of its cash and cash equivalents and is awaiting the government’s decision as to whether it will ever get more funding. The latest word comes from (soon to retire) EVP Wang Jianxi, who reportedly has been lobbying the State Council for months to get the funding in place. Well, he hasn’t succeeded, which leaves the CIC’s deal teams sitting on their hands.
My position in all this is clear: The CIC deserves to receive more money from the State Council. The fund has done everything asked of it, and it has done it darn well (especially considering it launched just before one of the worst financial crises in history). The returns have been solid. And the governance has improved dramatically (if we believe the annual report). In fact, I think it should have gotten a top up 12 months ago…
This post originally appeared on the Oxford SWF Project website.