China's pension fund is in talks to buy a stake in one of the big US private equity firms as part of Beijing's efforts to diversify investments abroad, the Financial Times said on Tuesday.
The Social Security Fund (SSF), which had 460 billion yuan (US$61.5 billion ) in assets at the end of September, held preliminary talks lately with Carlyle, KKR and TPG about buying minority stakes of up to 9.9 percent in one of the firms, said the London-based newspaper, citing sources familiar with the talks.
The talks suggest that the number of Chinese entities looking to make investments in foreign financial firms is poised to grow. Bear Stearns of the US and China's Citic Securities last week revealed plans to invest $1billion in each other.
The move by the national social security fund, is regarded as part of Beijing's strategy to direct funds abroad to curb excessive liquidity at home and maximize returns on its US$1.4 trillion in forex reserves.
However, the report said that negotiations had almost stalled amid caution by Chinese firms about tying up with private equity companies after China Investment Corp's loss-making investment in US equity firm Blackstone, whose share price has fallen - to $25.50 in afternoon trading in New York on Monday - from $31 since its listing in June, leaving Chinese investors leery about similar deals.
The new Chinese forex investment agency bought a stake of roughly 10 percent in Blackstone for US$3 billion before the latter's New York initial public offering. An official in the overseas investment bureau of the SSF declined to comment, saying he was unaware of such talks.