Here’s one to get the Americans going. Imagine that your prime US assets being coveted not by China, not by investors from the Middle East – but from a cosy tie-up of the two. The horror! Alert Congress. Something must be done.
Reuters reports on Wednesday that the bete noires of US inward investment, China (see CNOOC/Unocal) and Dubai (see DP World furore), are in talks about cooperating their state investment agencies. The newswire quotes an executive of Dubai World as saying that senior officials have already spoken about possible tie-ups, which could involve asset swaps, as China readies a vehicle that could wield as much as $200bn in investment might.
The fund will invest one-sixth of the country’s $1,200bn in foreign exchange reserves around the globe – and the embryonic agency has already coughed up $3bn on a 10 per cent stake in Blackstone, of course. (Better luck next time – Blackstone lasted two days before slipping back below its offer price of $31 a share on Tuesday to close at $30.75.)
The standing committee of the Chinese parliament has started to review the proposal and the suggestion is that the yet-to-be-named fund, modelled on Singapore’s state investment vehicle, will buy stakes worldwide in quoted companies and real estate, as well as making private equity investments.
Isthithmar, part of the Dubai government’s investment arm, has already made waves, building a 2.7 per cent stake in Standard Chartered and last week snapping up the QE2 liner for $100m. HSBC already has two middle eastern investors on its books.
Companies in the west had better get used to being on the receiving end of this pair’s attentions. The politicians probably should start preparing themselves too.