Sovereign-wealth fund to ramp up spending after quiet 2008

September 8, 2009

According to the Wall Street Journal, China’s sovereign-wealth fund has its eyes focused on US real estate.

China Investment Corp. sad on the side-lines throughout 2008 as the amid the global financial crisis, but now is opening its doors looking for deals.

The cheap government financing, coupled with depressed US commercial property values (off by 35% from their peak), could lead to widespread purchasing by the fund.

CIC already has met with US private-equity firms, including BlackRock Inc., Invesco Ltd. and Lone Star Funds.

Last year, CIC deployed a mere $4.8 billion in global financial markets. This year, with the fund seeking higher returns, it invested that much in a single month!

But its moves on US real estate are likely to be more subtle than seen in the 1980s, where Japanese acquisitions of the Rockefeller Center and the Pebble Beach golf course lead to political backlashes. The CIC is more likely to take minority stakes in investments and work through a US fund manager, says one analyst.

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