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Report: SAFE expands investment in Britain

By Yu Hongyan (chinadaily.com.cn)
Updated: 2008-09-08 17:16

The State Administration of Foreign Exchange (SAFE) has invested in nearly 50 listed companies in Britain through its Hong Kong listed subsidiary, according to a report from Caijing.com.cn on Monday.

The report said SAFE Investment Company Ltd has bought stakes that are all under 1 percent, but which have a total market value totaling 3.66 billion pounds ($6.7 billion).

The report says statistics from an information supplier affiliated to Thomason Financial affirmed the facts. Companies involved include major corporations such as Barclays, Royal Bank of Scotland Group (RBS), British Gas, Cadbury, Drax Group, Unilever, Tesco and Wire & Plastic Products Group.

Rio Tinto, and BHP Billiton, two Australian ore companies listed on the London Stock Exchange have also been invested in by SAFE, reportedly with a 0.52 percent and 0.5 percent stake respectively.

The investment portfolio held by SAFE are made up mostly of FTSE100 constituent stocks, and the rest belong to the FTSE250 constituent stocks. The 3.66-billion-pound figure, however, does not include SAFE's earlier investment of 1.6 percent stake in BP and 1 percent stake in Prudential in April.

Prudential, the second largest insurer in Britain, recently acknowledges that SAFE invested in the company through an anonymous account.

RBS, Cadbury, British Power International (BPI) and Tate & Lyle PLC have all confirmed SAFE’s investment. SAFE bought 0.5 percent of RBS, 0.72 percent of BPI, 0.97 percent of Cadbury and 0.75 percent of Tate & Lyle PLC.

"They have bought our stock for a long time", said a spokesman from BPI. The company was aware of the SAFE Investment's bid as "it is open and explicit".

Some companies have refused to comment, saying there is no need to disclose to the public if a shareholder takes less than 3 percent of their equities.

This year ANZ Bank and Total, the French energy company, have also confirmed that SAFE has made minor investments in their companies.

Caijing reporters confirmed that SAFE also invested in Britain through other companies or accounts. The media relations manager of Severn Trent Plc, the largest listed water and sewerage services company in Britain, said SAFE bought 0.86 percent shares of their company through the account named VIDACOS, and the company confirmed the relation between this account and the SAFE.

It is said that SAFE has been allowed to invest in overseas equities with 5 percent of the State foreign exchange reserve since 2005. The amount should be no less than $75 billion considering the foreign exchange reserve scale of about $1.5 trillion by the end of 2007.

With a registered capital of HK$100 million ($12.81 million), the Hong Kong-based SAFE Investment Company Limited was founded on June 2, 1997.

The by-laws of SAFE Investment indicate that the company's business scope covers investment in any kind of financial vehicles including securities, foreign exchange, and commodities; management of foreign exchange reserves and other monetary financial issues; management of investment funds, and other operations authorized by the central bank globally.