Chinese wealth fund acquires stake in British distiller Diageo
22 Jul 2009
China's sovereign wealth fund, China Investment Corp (CIC) has taken a £221 million stake in British distiller Diageo giving it a 1.1 per cent stake in the company. According to analysts the move comes in continuation of China's strategy of spreading investments over different global markets and asset classes.
With its latest foray CIC, which manages $200 billion of the country's $2,132 billion in foreign exchange reserves, has become the ninth-largest investor in the British distiller.
CIC which was established in 2007, came for heavy criticism at home following the paper losses suffered by its early high-profile investments in US financial companies, Blackstone and Morgan Stanley.
The company has started reasserting itself in recent months with acquistions in a Canadian miner, an Australian property trust and consolidation of its stake in Morgan Stanley. The fund also holds a .5 per cent stake in Britain's largest retailer, Tesco.
CIC, perhaps only too aware of the political implications that may be read into Chinese investements in unfamiliar markets said it wants its investments to be passive.
According to analysts the new investment from CIC would not bring any significant change to the company's market position. They say the investment is a part of the a series of investments that the company is making in companies such as British supermarket chain Tesco.