Brown offers London as base for China sovereign fund

(Agencies/China Daily)
Updated: 2008-01-20 15:23

UK Prime Minister Gordon Brown offered London as an overseas base for China Investment Corp (CIC), the nation's $200 billion sovereign wealth fund, aiming to encourage the world's fastest-growing major economy to invest in Britain.

Related readings:
Sovereign Wealth Funds to see another boom in 2008
City of London woos China Investment Corp
CIC gives reference price for MS share purchase
Market, experts hail Morgan Stanley deal
CIC to be stable force in global financial market

China fund in talks to buy stake in US private equity firms

"If CIC opened an office in London, that would help more UK fund managers win mandates from the fund," said Ke Shifeng, who helps manage about $5 billion of Greater China assets for Martin Currie Investment Management in Shanghai. "It could also drive CIC to take more equity stakes in British companies."

China's economy overtook the UK in 2005, and trade between the nations may grow 50 percent to $60 billion by 2010, according to a goal set by Brown and Chinese Premier Wen Jiabao on Friday.

The two nations signed eight agreements worth a total of $800 million to cooperate in education, climate change and renewable energy, according to Xinhua News Agency.

Moreover, the two premiers agreed to allow Chinese companies to double their initial public offers on the London Stock Exchange in the next two years.

CIC, set up last year to seek better returns on China's foreign-exchange reserves, plans to invest as much as $70 billion overseas. The Beijing-based fund spent more than $8 billion last year buying stakes in Morgan Stanley, the second-biggest US securities firm, and Blackstone Group LP, manager of the world's largest buyout fund.

"CIC setting up in London would foster closer ties and help make it more willing to commit capital to British opportunities," said Barry Livett, co-chair of financial services at the British Chamber of Commerce in China and chief executive of Abacus Corporate Finance.

"Amidst the global economy's difficulties and turbulence, the importance of China and our growing relationship is absolutely crucial to the success of the global economy," Brown said during his first China trip as prime minister.

(For more biz stories, please visit Industry Updates)