CIC: We'll Get Our Money Out of Reserve Primary
Published:
2008-10-16
China's sovereignty wealth fund yesterday denied media reports that it had billions of dollars frozen in a massive US money-market fund, the Reserve Primary Fund.
On October 12, Bloomberg reported that the China Investment Corporation (CIC) might have as much as USD5.4 billion frozen in the fund, which suspended withdrawals after it was deluged by investors seeking redemptions following the Lehman Brothers bankcruptcy filing.
The report cited US Security and Exchange Commission (SEC) filings showing the CIC had acquired 11.1% of shares in Reserve Primary Fund through its subsidiary—Stable Investment Corp.
In response, the CIC released a clarification on its website on October 15, saying it had filed to withdraw its investment before the Fund suspended redemptions. The CIC note asserted that as a result of its early action, it was classified as a creditor, not an investor, and was entitled to full repayment.
The CIC note said that the Fund had announced it would make an initial redemption distribution accounting for some 35% of the total amount due to creditors under the guidance of the SEC.
After announcing on October 13 that it would distribute USD20 billion, the Primary Fund published a press release on October 15 reiterating that the funds would be distributed on a pro rata basis.
The CIC has already been setback by soured investments in Blackstone and Morgan Stanley.
In June 2007, before its formal establishment, the CIC spent 3 billion USD to buy nearly a 10% stake in Blackstone. At that time, CIC's purchase price was 29.6 dollar per share. By October 14, Blackstone's stock price had tumbled to 10.87 dollar per share, creating losses of up to 1.89 billion USD.
In December 2007, the CIC invested ＄5 billion in Morgan Stanley at a reference price of between 48.07 to 57.68 dollars per share. That stock today is worth just over 18 dollars per share.
On October 12, Bloomberg reported that the China Investment Corporation (CIC) might have as much as USD5.4 billion frozen in the fund, which suspended withdrawals after it was deluged by investors seeking redemptions following the Lehman Brothers bankcruptcy filing.
The report cited US Security and Exchange Commission (SEC) filings showing the CIC had acquired 11.1% of shares in Reserve Primary Fund through its subsidiary—Stable Investment Corp.
In response, the CIC released a clarification on its website on October 15, saying it had filed to withdraw its investment before the Fund suspended redemptions. The CIC note asserted that as a result of its early action, it was classified as a creditor, not an investor, and was entitled to full repayment.
The CIC note said that the Fund had announced it would make an initial redemption distribution accounting for some 35% of the total amount due to creditors under the guidance of the SEC.
After announcing on October 13 that it would distribute USD20 billion, the Primary Fund published a press release on October 15 reiterating that the funds would be distributed on a pro rata basis.
The CIC has already been setback by soured investments in Blackstone and Morgan Stanley.
In June 2007, before its formal establishment, the CIC spent 3 billion USD to buy nearly a 10% stake in Blackstone. At that time, CIC's purchase price was 29.6 dollar per share. By October 14, Blackstone's stock price had tumbled to 10.87 dollar per share, creating losses of up to 1.89 billion USD.
In December 2007, the CIC invested ＄5 billion in Morgan Stanley at a reference price of between 48.07 to 57.68 dollars per share. That stock today is worth just over 18 dollars per share.
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