China bought a stake in BP Plc, its second investment in a European oil company as the nation seeks to secure resources and boost returns on the world's largest foreign-exchange reserves.
BP, Britain's largest company by market value, is aware a Chinese sovereign fund bought shares and welcomes the investment, spokesman David Nicholas said today. The fund purchased just less than 1 percent of BP, with the stake worth about 1 billion pounds ($1.97 billion), the Daily Telegraph reported.
The BP stake adds to Chinese investments in France's Total SA, Europe's third largest oil company, and Rio Tinto Group, the world's third-largest miner. China is buying assets across the globe as commodity prices rise to records and its foreign currency reserves swell to $1.68 trillion.
``It could be the beginning of a wave of investments in major oil companies as oil prices keep racing higher,'' said Victor Shum, senior principal at energy consultant Purvin & Gertz Inc. in Singapore. ``It shouldn't raise any political concern as the Chinese are not gaining management control. It's passive.''
China Investment Corp., the nation's $200 billion sovereign wealth fund, last year spent more than $8 billion on stakes in Blackstone Group LP, manager of the world's largest buyout fund, and Morgan Stanley, the second-biggest U.S. securities firm.
``We're aware of the Chinese shareholding and we welcome all shareholders,'' said Nicholas. He declined to comment further.
BP Shares, Oil
BP shares have fallen 11 percent this year to 549 pence at the close in London yesterday. They gained 8.4 percent last year. Crude oil for May delivery rose to a record $112.45 a barrel on the New York Mercantile Exchange. It was at $112.43 at 10:48 a.m. in Singapore. Prices are up 77 percent from a year ago.
Wang Xiaoya, a Beijing-based spokeswoman at China Investment, which manages the nation's $200 billion sovereign wealth fund, declined to comment on the report. Zhao Hongtao, a spokeswoman for China's $70 billion national pension fund, said the agency hasn't made such investments.
A Beijing-based official at China's foreign-exchange regulator declined to comment on today's report. SAFE Investment Co., a Hong Kong-based subsidiary of the foreign-exchange watchdog, bought a stake of less than 1 percent in Australia & New Zealand Banking Group Ltd. in December.
The U.K. government is aware of the stake-building by the fund, and is understood to be monitoring the situation closely, the Telegraph said, citing unidentified people in banking. The holding in BP, with a capitalization of 104 billion pounds, was bought over a period of time, according to the report.
Cnooc - Unocal
The rising influence of state-owned capital pools has prompted the U.S. and Europe to demand more transparency and disclosure. Cnooc Ltd., China's largest offshore oil explorer, was thwarted in August 2005 when U.S. lawmakers helped block its $18.5 billion bid for Unocal Corp., citing threats to national energy security.
``Our investment mode is close to that of pension funds or university endowment funds,'' said Bai Xiaoqing, a general director at China Investment, at a Paris conference yesterday. ``Our investments are long term and passive,'' and ``we're not interested in taking control of companies.''
The Kuwait Investment Authority is among several other sovereign funds from other countries to also hold shares in BP, the Telegraph said, without saying where it got its information.
BP, Britain's largest company by market value, is aware a Chinese sovereign fund bought shares and welcomes the investment, spokesman David Nicholas said today. The fund purchased just less than 1 percent of BP, with the stake worth about 1 billion pounds ($1.97 billion), the Daily Telegraph reported.
The BP stake adds to Chinese investments in France's Total SA, Europe's third largest oil company, and Rio Tinto Group, the world's third-largest miner. China is buying assets across the globe as commodity prices rise to records and its foreign currency reserves swell to $1.68 trillion.
``It could be the beginning of a wave of investments in major oil companies as oil prices keep racing higher,'' said Victor Shum, senior principal at energy consultant Purvin & Gertz Inc. in Singapore. ``It shouldn't raise any political concern as the Chinese are not gaining management control. It's passive.''
China Investment Corp., the nation's $200 billion sovereign wealth fund, last year spent more than $8 billion on stakes in Blackstone Group LP, manager of the world's largest buyout fund, and Morgan Stanley, the second-biggest U.S. securities firm.
``We're aware of the Chinese shareholding and we welcome all shareholders,'' said Nicholas. He declined to comment further.
BP Shares, Oil
BP shares have fallen 11 percent this year to 549 pence at the close in London yesterday. They gained 8.4 percent last year. Crude oil for May delivery rose to a record $112.45 a barrel on the New York Mercantile Exchange. It was at $112.43 at 10:48 a.m. in Singapore. Prices are up 77 percent from a year ago.
Wang Xiaoya, a Beijing-based spokeswoman at China Investment, which manages the nation's $200 billion sovereign wealth fund, declined to comment on the report. Zhao Hongtao, a spokeswoman for China's $70 billion national pension fund, said the agency hasn't made such investments.
A Beijing-based official at China's foreign-exchange regulator declined to comment on today's report. SAFE Investment Co., a Hong Kong-based subsidiary of the foreign-exchange watchdog, bought a stake of less than 1 percent in Australia & New Zealand Banking Group Ltd. in December.
The U.K. government is aware of the stake-building by the fund, and is understood to be monitoring the situation closely, the Telegraph said, citing unidentified people in banking. The holding in BP, with a capitalization of 104 billion pounds, was bought over a period of time, according to the report.
Cnooc - Unocal
The rising influence of state-owned capital pools has prompted the U.S. and Europe to demand more transparency and disclosure. Cnooc Ltd., China's largest offshore oil explorer, was thwarted in August 2005 when U.S. lawmakers helped block its $18.5 billion bid for Unocal Corp., citing threats to national energy security.
``Our investment mode is close to that of pension funds or university endowment funds,'' said Bai Xiaoqing, a general director at China Investment, at a Paris conference yesterday. ``Our investments are long term and passive,'' and ``we're not interested in taking control of companies.''
The Kuwait Investment Authority is among several other sovereign funds from other countries to also hold shares in BP, the Telegraph said, without saying where it got its information.
Source: Bloomberg| by Nesa Subrahmaniyan & Lenka Ponikelska
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