China Investment Corp (CIC), which operates the country’s sovereign wealth fund, on Wednesday said it had given notice to the Reserve Primary Fund, a US money market fund, to withdraw all its investment before the latter’s suspension announcement.
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CIC says US fund to return all its investment
16 October 2008
China Investment Corp (CIC), which operates the country’s sovereign wealth fund, on Wednesday said it had given notice to the Reserve Primary Fund, a US money market fund, to withdraw all its investment before the latter’s suspension announcement.
The CIC had received a written verification from the US fund to return the investment and the relevant interest, the Chinese firm said in a statement to clarify the status of its investment in the Reserve Primary Fund via CIC affiliate the Stable Investment Corp.
Bloomberg reported on Monday CIC may have as much as $5.4 billion frozen as the Reserve Primary Fund suspended withdrawals last month.
The Reserve Primary Fund suspended redemption last month because of losses on debt issued by bankrupted Lehman Brothers.
A US regulatory filing showed Stable Investment Corp was the biggest institutional shareholder in the US monetary market fund with a stake of potentially more than $5 billion.
CIC confirmed its investment in the Primary Fund, but said it would not be subject to the possible 3 percent losses incurred by the Reserve Primary Fund.
The fund announced investors who hadn’t made a withdrawal before the redemption suspension may be subject to the 3 percent principal losses.
The CIC made an order to claim all its money back before the withdrawals were suspended, and received a written confirmation from the Primary Fund to return all the principal and interest, said CIC in a statement published on its website.
Currently, CIC is not a shareholder of the Primary Fund, but a creditor, according to the statement.
The Sovereign wealth fund, with capital of $200 billion from the country’s huge foreign exchange reserve, has attracted great attention at home as its two major investments in Blackstone and Morgan Stanley suffered losses during the ongoing financial crisis.
The Primary Fund has announced it would return about 35 percent of the money of its investors soon. The plan to return the remainder was under draft and under supervision of the US Securities and Exchange Commission.
The CIC said it had been in contact with the US securities regulators to ensure its investment was fully refunded and its legal rights were protected.
Established a year ago, the CIC has invested $3 billion in US private equity firm Blackstone and $5 billion in investment bank Morgan Stanley.
Also on Wednesday, the CIC said it had opened its official website (www.china-inv.cn) in both Chinese and English in effort to increase transparency.
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