Wealth fund hiring foreign money managers

(Agencies/China Daily)
Updated: 2008-02-29 10:03

China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, is hiring foreign fund managers to invest in hedge funds and private equity as well as in traditional assets such as bonds and shares.

Related readings:
Wanted: CIC bond managers
Sovereign wealth fund seeks external fixed-income managers
Managers scramble for CIC
Brown offers London as base for China sovereign fund

Gao Xiqing, the fund's general manager, said Thursday that he hoped to hire the managers within the next few months.

Dozens of the world's leading money managers have been making presentations to CIC in Beijing in recent weeks in an effort to win coveted mandates to handle some of the fund's money.

"The hiring is going smoothly. We are actively doing it. The asset classes we are hiring managers for include the cash market, fixed income, equity and hedge funds," Gao told reporters on the sidelines of a pension fund forum in Suzhou.

"We will also be hiring managers for private equity," he added, but did not elaborate.

China set up the sovereign wealth fund last September to earn greater returns on part of its $1.53 trillion of foreign exchange reserves.

CIC will invest only a third of its initial money overseas. It has already spent most of the rest buying investment vehicles used by the central bank to recapitalize domestic banks.

Gao said he hoped to finish hiring external money managers as soon as possible within a few months. "We must negotiate the terms, so it needs some time," Gao said.

The process could have been shorter if CIC had invited just a few firms to bid for the mandates.

But to ease concerns about a lack of transparency among sovereign wealth funds, CIC had invited a large number of asset management firms to apply, making selection a tougher task.

"Sovereign funds have come under a lot of pressure. In fact, we didn't need to invite everyone. We just needed to invite the top-performing ones. But we're doing so to show we have transparency," Gao said.

Zheng Bingwen, a pension fund expert at the Chinese Academy of Social Sciences, said at the forum that CIC's assets would expand rapidly as China's foreign exchange reserves are likely to keep growing for the next 20 years.

(For more biz stories, please visit Industry Updates)