China’s sovereign wealth fund has acquired 1.1 per cent of the Diageo drinks group, giving it a stake worth £221m ($365m), in a sign of its emerging strategy to spread its investments over different global markets and asset classes.
The move by China Investment Corp, which manages $200bn of the country’s $2,132bn in foreign exchange reserves, makes the fund the UK-bas
China’s sovereign wealth fund has acquired 1.1 per cent of the Diageo drinks group, giving it a stake worth £221m ($365m), in a sign of its emerging strategy to spread its investments over different global markets and asset classes.
The move by China Investment Corp, which manages $200bn of the country’s $2,132bn in foreign exchange reserves, makes the fund the UK-based groups’ ninth-largest investor.
CIC, established in 2007, came under withering criticism at home after its early high-profile investments in Blackstone and Morgan Stanley, the US financial companies, suffered large paper losses.
In recent months, it has started quietly to reassert itself, buying stakes in a Canadian miner and an Australian property trust, as well as taking the opportunity of low share prices to increase its stake in Morgan Stanley.
It also holds a 0.5 per cent stake in Tesco, Britain’s largest retailer, but is not one of the group’s top 30 shareholders.
The financial crisis has created buying opportunities for CIC, and made some markets that initially hostile to sovereign funds much more solicitous of Chinese money. London has always been one of the open bourses for China.
The State Administration of Foreign Exchange, or Safe, which manages the bulk of the foreign reserves, has bought stakes in numerous listed companies, including BP.
CIC, which has been acutely conscious of the political impact of Chinese funds arriving in unfamiliar markets, says it wants its investments to be passive, balanced and diversified.
London-based beverage analysts said the move was a sign of the fund’s confidence that Diageo would play a significant role in the Chinese economy in the future.
China has the world’s most rapidly growing alcoholic drinks market, with volumes forecast to expand by 17.6bn litres between 2008 and 2014, according to beverage research group Canadean.
Diageo last year created a separate operating business to build its presence in China after losing the advantage to Pernod Ricard.
Diageo expects China to rival the US as one of its most important markets by 2021.
Diageo last month launched a vodka called Shanghai White in Hong Kong, made by a joint venture with the Sichuan Chengdu Quanxing group, the owner of the Shui Jing Fang baiju brand. It plans to extend distribution elsewhere in China.
Ivan Menezes, chairman of Diageo Asia Pacific, said earlier this year that the company’s investment in Shui Jing Fang reflected its desire to build scale in China and access the “huge and very rapidly growing profit pool in China beyond our position in international brands”.
The move by China Investment Corp, which manages $200bn of the country’s $2,132bn in foreign exchange reserves, makes the fund the UK-based groups’ ninth-largest investor.
CIC, established in 2007, came under withering criticism at home after its early high-profile investments in Blackstone and Morgan Stanley, the US financial companies, suffered large paper losses.
In recent months, it has started quietly to reassert itself, buying stakes in a Canadian miner and an Australian property trust, as well as taking the opportunity of low share prices to increase its stake in Morgan Stanley.
It also holds a 0.5 per cent stake in Tesco, Britain’s largest retailer, but is not one of the group’s top 30 shareholders.
The financial crisis has created buying opportunities for CIC, and made some markets that initially hostile to sovereign funds much more solicitous of Chinese money. London has always been one of the open bourses for China.
The State Administration of Foreign Exchange, or Safe, which manages the bulk of the foreign reserves, has bought stakes in numerous listed companies, including BP.
CIC, which has been acutely conscious of the political impact of Chinese funds arriving in unfamiliar markets, says it wants its investments to be passive, balanced and diversified.
London-based beverage analysts said the move was a sign of the fund’s confidence that Diageo would play a significant role in the Chinese economy in the future.
China has the world’s most rapidly growing alcoholic drinks market, with volumes forecast to expand by 17.6bn litres between 2008 and 2014, according to beverage research group Canadean.
Diageo last year created a separate operating business to build its presence in China after losing the advantage to Pernod Ricard.
Diageo expects China to rival the US as one of its most important markets by 2021.
Diageo last month launched a vodka called Shanghai White in Hong Kong, made by a joint venture with the Sichuan Chengdu Quanxing group, the owner of the Shui Jing Fang baiju brand. It plans to extend distribution elsewhere in China.
Ivan Menezes, chairman of Diageo Asia Pacific, said earlier this year that the company’s investment in Shui Jing Fang reflected its desire to build scale in China and access the “huge and very rapidly growing profit pool in China beyond our position in international brands”.
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