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Thursday 24 September 2009
CIC to take slice of Noble for US$850m
China Investment Corp (CIC), China’s giant sovereign wealth fund, is buying a 15 per cent stake in Singapore-listed Noble Group for US$850 million. This marks CIC’s latest move into the resources sector.
China’s shopping spree in resources sector continues
By OH BOON PING
(SINGAPORE) China Investment Corp (CIC), China’s giant sovereign wealth fund, is buying a 15 per cent stake in Singapore-listed Noble Group for US$850 million. This marks CIC’s latest move into the resources sector.
In a statement on Monday, Noble said that it will place out 438 million newly issued shares and 135 million shares from trusts associated with the interests of Noble founder and CEO Richard Elman to CIC at $2.1137 per share.
The placement is subject to approval of the respective boards of directors of Noble Group and CIC and final legal documentation.
According to OCBC Investment Research, CIC will emerge with a 15 per cent stake in Noble, while the issue will raise net proceeds of US$642.2 million.
Noble said the share placement will provide it with additional capital to pursue strategic investments in key agricultural markets globally.
The deal will also allow CIC and Noble to jointly invest in infrastructure assets and supply-chain management related to agricultural commodities, Noble said.
‘It is the intention of both companies to bring to bear their respective strengths to achieve results which are satisfactory to their respective shareholders and bring benefits to consumers of agricultural products worldwide,’ Noble said.
The Reuters news agency reported that the latest move was seen as a step in succession planning for Mr. Elman who is 69. Noble said the stake sale did not reduce Mr. Elman’s commitment to the firm.
The group has assets ranging from Brazilian sugar mills to Australian iron ore to oilseed-processing facilities in China and India. The firm in recent years has focused on owning commodities infrastructure such as terminals, processing facilities and other supply-chain parts, with an eye toward China’s fast-growing market.
It also has a sizeable commodities-trading operation. Its energy operations, which include fuel oil, coal and ethanol, account for more than half of revenue. And the company has its own port facilities throughout South America. Noble Group took a hit with the commodities slump that followed the global financial crisis.
Revenue for the first half of this year fell 33 per cent to US$13.26 billion, though net income rose 17 per cent to US$340 million in part from a one-time gain.
However, the stock is viewed as an early beneficiary of any recovery in the commodity markets, according to some analysts.
In fact, some analysts such as CIMB viewed the placement positively, as ‘it removes the share overhang concerns’.
Trade in Noble’s shares was halted for the past week, when it said it was in talks with an unidentified investor for a major stake.
Meanwhile, CIC holds about US$300 billion in assets, but in recent months, it has been on an investment spree, with resources and energy being an increasingly important target of activity. Earlier, the fund also ploughed some US$1.5 billion into a 17.2 per cent stake in Canadian miner Teck Resources.
In the past two years, CIC has shifted its emphasis from dollar investments in financial firms, including Blackstone and Morgan Stanley, to investments in commodities groups and hard assets including property.
According to Jing Ulrich, JP Morgan head of China equities, CIC is estimated to spend up to US$50 billion in new overseas investments this year.
Recently, the SWF held discussions with property investors in the US, such as Blackstone, regarding possible investments. It also took a stake in Canary Wharf in London.
1 comment:
CIC to take slice of Noble for US$850m
China’s shopping spree in resources sector continues
By OH BOON PING
(SINGAPORE) China Investment Corp (CIC), China’s giant sovereign wealth fund, is buying a 15 per cent stake in Singapore-listed Noble Group for US$850 million. This marks CIC’s latest move into the resources sector.
In a statement on Monday, Noble said that it will place out 438 million newly issued shares and 135 million shares from trusts associated with the interests of Noble founder and CEO Richard Elman to CIC at $2.1137 per share.
The placement is subject to approval of the respective boards of directors of Noble Group and CIC and final legal documentation.
According to OCBC Investment Research, CIC will emerge with a 15 per cent stake in Noble, while the issue will raise net proceeds of US$642.2 million.
Noble said the share placement will provide it with additional capital to pursue strategic investments in key agricultural markets globally.
The deal will also allow CIC and Noble to jointly invest in infrastructure assets and supply-chain management related to agricultural commodities, Noble said.
‘It is the intention of both companies to bring to bear their respective strengths to achieve results which are satisfactory to their respective shareholders and bring benefits to consumers of agricultural products worldwide,’ Noble said.
The Reuters news agency reported that the latest move was seen as a step in succession planning for Mr. Elman who is 69. Noble said the stake sale did not reduce Mr. Elman’s commitment to the firm.
The group has assets ranging from Brazilian sugar mills to Australian iron ore to oilseed-processing facilities in China and India. The firm in recent years has focused on owning commodities infrastructure such as terminals, processing facilities and other supply-chain parts, with an eye toward China’s fast-growing market.
It also has a sizeable commodities-trading operation. Its energy operations, which include fuel oil, coal and ethanol, account for more than half of revenue. And the company has its own port facilities throughout South America. Noble Group took a hit with the commodities slump that followed the global financial crisis.
Revenue for the first half of this year fell 33 per cent to US$13.26 billion, though net income rose 17 per cent to US$340 million in part from a one-time gain.
However, the stock is viewed as an early beneficiary of any recovery in the commodity markets, according to some analysts.
In fact, some analysts such as CIMB viewed the placement positively, as ‘it removes the share overhang concerns’.
Trade in Noble’s shares was halted for the past week, when it said it was in talks with an unidentified investor for a major stake.
Meanwhile, CIC holds about US$300 billion in assets, but in recent months, it has been on an investment spree, with resources and energy being an increasingly important target of activity. Earlier, the fund also ploughed some US$1.5 billion into a 17.2 per cent stake in Canadian miner Teck Resources.
In the past two years, CIC has shifted its emphasis from dollar investments in financial firms, including Blackstone and Morgan Stanley, to investments in commodities groups and hard assets including property.
According to Jing Ulrich, JP Morgan head of China equities, CIC is estimated to spend up to US$50 billion in new overseas investments this year.
Recently, the SWF held discussions with property investors in the US, such as Blackstone, regarding possible investments. It also took a stake in Canary Wharf in London.
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