Qatar Wealth Fund Buys 22% of Chinese Private Equity Firm

Qatar Holding LLC, the investment arm of the nation’s sovereign-wealth fund, bought a 22 percent stake in Chinese private equity firm Citic Capital Holdings Ltd. as the country accelerates spending on overseas acquisitions.

Qatar Holding bought the shares in Citic, part owned by China Investment Corp. for an undisclosed amount, according to an e-mailed statement today from the fund. The private equity firm, founded in 2002 and based in Hong Kong, oversees more than $4.4 billion, including in funds focused on property.

Qatar is using wealth from the world’s third-largest gas reserves to snap up assets across the globe. The Middle Eastern nation, which already owns a stake in Agricultural Bank of China Ltd., the country’s third-largest bank, took an 11 percent stake in Swiss miner Xstrata Plc. It also bought U.K. luxury-good store Harrods Ltd for 1.5 billion pounds ($2.3 billion) in 2010.

Citic Capital has raised money from investors including Singapore’s state-backed Temasek Holdings Pte. In November, the company said it raised $225 million in the first closing of its fourth real estate fund. The value of private-equity deals in China rose 19 percent to $28.5 billion last year and has doubled since 2009, according to Asian Venture Capital Journal.

China Sovereign Fund

After the Qatar investment, Citic Pacific Ltd. and Citic International Financial Holdings will together hold a 43 percent stake in Citic Capital. CIC, China’s sovereign wealth fund, will own 31.1 percent, according to the statement.

Qatar pushed Glencore International Plc, which is offering to buy Xstrata for $25 billion, to raise its bid by 16 percent. The demand, made on June 26, took the commodities-trading firm by surprise and triggered fresh talks, according to people with knowledge of the discussions who asked not to be identified.

Glencore Chief Executive Officer Ivan Glasenberg said in a telephone interview that he’s ready to walk away from the deal rather than overpay.

Qatar Holding agreed to pay 900 million pounds ($1.42 billion) for a 20 percent stake in BAA Ltd., which owns London’s Heathrow airport, according to an Aug. 17 statement.

Qatar Investment Authority, the main sovereign wealth fund, has $30 billion to invest this year, board member Hussain Al Abdulla said in April. It is opportunistic and doesn’t have any geographic, asset or currency allocation targets, he said.

China License

The Authority is also applying for a license to invest $5 billion in China under the Qualified Foreign Institutional Investor program, the China Securities Journal said June 25, citing Energy and Industry Minister Mohammed Bin Saleh al-Sada.

Qatar will mostly allocate the funds to the domestic A-share equity market and initial public offerings, with some investment in bonds, al-Sada said.

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