China Investment Corp. shifts investment focus from Canada to U.S.
CIC invested estimated $4.5B US in Canadian energy and mining, with poor returns
China Investment Corp., a sovereign wealth fund with a mandate to invest mainland China's reserves overseas, has shut its Toronto office and established a new North American base in New York.
The state-owned company has been in Toronto for the last five years, but its investments, many of them in the energy sector, have plunged as commodity prices fell. Reuters estimates it invested $4.5 billion US in Canada.
CIC invested billions in oilsands companies, including Athabasca Oil Corp., Penn West Petroleum Ltd., Sunshine Oil Sands Ltd. and MEG Energy Corp., all of which have seen stock prices fall this year.
It also invested $1.7 billion in Teck Resources, which temporarily suspended production at its six Canadian coal mines for three weeks in the summer due to market conditions, and millions more in SouthGobi Resources, a coal firm operating in Mongolia which has not been able to repay its debts to CIC.
The CIC posted a notice on its website Dec. 14 saying it had opened a New York office, but shut its Toronto location, as a result of "internal reorganization."
"CIC applauds the open and fair investment policy and business environment of Canada and will continue to explore relevant investment opportunities in Canada," the statement said.
However, CIC is shifting its focus to U.S. investments from its new base in New York.
The sovereign wealth fund was established in 2007 to help China earn higher returns on its foreign exchange reserves. It has had an international arm since 2011, with its first base in Toronto.
According to Reuters, CIC has $747 billion US under management and invests in equity and bond investments, hedge funds and real estate investments, private equity fund investments, co-investments and minority investments, according to its website.
- An earlier version of this story may have left the impression that Teck Resources was permanently closing its six Canadian coal mines. In fact, the closures were temporary -- it suspended production at the mines for three weeks because of weak market conditions.Jan 05, 2016 8:37 AM ET