As Energy Needs Spike, China's CIC Partners With GDF Suez

(August 10, 2011) — The $410 billion China Investment Corporation (CIC) has confirmed investment in French energy company GDF Suez SA.

The Chinese sovereign wealth fund revealed that it is investing up to $4 billion in the firm in an effort to expand its investments in Western energy companies.

According to the sovereign wealth fund, the CIC will take a 30% stake in the energy company’s exploration-and-production business for as much as $3.15 billion. “As part of the transaction, CIC would also acquire GDF Suez’s stake in the Atlantic LNG liquefaction plant located in Trinidad and Tobago for an amount of $850 million,” the CIC wrote in a statement posted on its website.

Aiming to meet the energy needs of the world’s most rapidly-growing economy, the two companies will cooperate more in gas, electricity, water, and energy efficiency services, with the Asia-Pacific region being a major focus.

Last week, the CIC reported that after boosting its allocation to equities and alternatives, the sovereign wealth fund posted a 11.7% return for a second year in 2010.

“The international investment environment is getting more complicated, and there’s great uncertainties towards sustained global recovery and growth,” CIC Chairman Lou Jiwei said in the fund’s 2010 annual report, referencing factors such as the eurozone crisis and soaring commodities prices. According to the CIC’s report, the fund decreased investment proportions in North America and Latin America in 2010 while upping its exposure to the Asia-Pacific region, Europe and Africa.

In terms of asset allocation, the CIC funneled money into private equity, infrastructure projects, direct investment and real estate. Meanwhile, alternative investments increased to 21% of the global portfolio from 6% in 2009.