Qatari sovereign wealth fund buys into CITIC Capital

Qatar Investment Authority-owned investment company Qatar Holding has purchased almost a quarter of the Hong Kong-based private equity and real estate firm further diluting the ownership by CITIC Holdings subsidiaries and sovereign wealth fund CIC.

Sovereign wealth fund Qatar Investment Authority has acquired a 22.22 percent stake in Hong Kong-based private equity and real estate firm CITIC Capital via Qatar Holding, one of its investment arms.

The investment by the Qatari state investor both increases its exposure to Chinese investments while further diluting the stakes of sellers CITIC Pacific and CITIC International – part of the CITIC Holding conglomerate – and diluting the position of China’s own sovereign wealth fund, China Investment Corporation, also.

Following the investment by Qatar Holding the CITIC companies will own 42.78 percent between them, China Investment Corporation will own 31.11 percent and the management of CITIC Capital will own 3.89 percent.

“We warmly welcome Qatar Holding to be our new shareholder,” said Yichen Zhang, CITIC Capital’s chief executive officer. “Not only will Qatar Holding provide us with an enlarged capital base to fund our business expansion and investments, its significant backing will strengthen our brand positioning meaningfully as the most preferred and committed partner to invest with, both in and outside of China.”

The investment by the Qatari state investor comes three years after CIC made its original purchase of a 40 percent stake. While the price of neither transaction was announced, Reuters reported then that CIC’s original stake cost $260 million.

CITIC Capital has grown considerably since then, including as a real estate investor. Having successfully deployed more than 70 percent of the capital of the $400 million in its third China real estate fund, China Real Estate Investment Fund III, the firm began raising a fourth fund in April last year. The CITIC Capital China Retail Properties Investment Fund is expected to corral $600 million and the firm has already made headway raising the money thanks to a $225 million first closing with commitments from institutional investors in the US, Europe and Asia. These commitments include a cornerstone investment by Cleveland-based investment and advisory firm, The Townsend Group.

Qatar Holding was established in 2006 and charged to make strategic private and public equity investments to benefit and diversify the economy of the Middle Eastern state. Other high profile real estate investments made by the state investor include sizeable entity level stakes in Asian-hotels developer and fund manager Banyan Tree Hotels and Resorts and the biggest landlord in London’s Canary Wharf, Canary Wharf Group.