China Investment Corporation’s Charm Offensive

One year ago Sovereign Wealth Funds (SWF) operated in obscurity, unknown to all but the most plugged in Wall Street dealmakers who had been courting them in the hopes of one day generating fees.

Bear Stearns recently turned to Lazard dealmaker Gary Parr in a last ditch effort to obtain a capital infusion, and presumably to keep the firm out of Jamie Dimon's hands. Parr's rolodex is full of SWF contacts, given their proclivity to invest in the financial services sector.

And with the scrutiny of the SWF heating up, they are going on the offensive:

Sovereign wealth funds are teaming up with the private equity industry, business trade associations and major financial institutions to strategize a defense against the growing political scrutiny of the $3 trillion funds.

Last week, about 30 lawyers and lobbyists — organized, according to one attendee, by a representative from private equity firm The Carlyle Group — conferred at JPMorgan’s New York offices to discuss their role in the growing political issue.....Former Treasury Secretary Larry Summers warns that government-related investment entities could politicize the economics of corporations. Politico

The charm offensive has started. Lesley Stahl of 60 Minutes sat down with Gao Xiqing, the erudite graduate of Duke University's law school and a former associate at Richard Nixon's former law firm Mudge Rose.

He now heads up the China Investment Corporation (CIC), the $200 billion fund that began managing a portion of China’s foreign exchange reserves on September 29, 2007. Its $3 billion investment into Blackstone Group and a $5.5 billion infusion into Morgan Stanley have quickly put them on Wall Street’s, and increasingly Main Street’s, radar.

A wolf in sheep’s clothing?  CIC has picked the perfect ambassador, and Gao Xiqing is on his best behavior with Lesley. With such deep pockets no doubt many Americans find him irresistible, but many are wary of his intentions. 

Vultures, locusts or just communist capitalists? CIC is making noise that they will soon become more transparent; I will believe when I see it. Your move, Gao Xiqing:

60 Minutes/Part One

60 Minutes Part Two

Businesses plot strategy to protect wealth funds
Politico

CIC homepage
-----------------------------------------------------------------------------------------------------------------------
The content contained in this blog represents the opinions of underthecounter. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

Comments:

<< Back to main