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Glencore likely to get CIC investment

(China Daily/Agencies)
Updated: 2009-09-19 08:23

China's $200-billion sovereign wealth fund has added privately-held commodities trader Glencore International AG to its roster of approved investment partners as it deepens its access to global raw material markets, two sources familiar with the matter said.

A source familiar with China Investment Corp's strategy said Glencore and sovereign wealth fund's fixed-income department recently concluded a preliminary "commodities product investment agreement". The source was not able to offer any additional details.

A manager at a trading and investment firm in Asia, which is a client of Glencore, said top management from Glencore visited CIC in Beijing in August and signed a memorandum of understanding in which CIC agreed to invest in Glencore's products or bonds. A CIC spokesman declined to comment.

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It was not immediately clear how CIC would work with Glencore, the world's biggest commodities trader, which typically trades its own book. But Glencore also has a derivatives trading venture with Credit Suisse, which has an expanding business offering commodity investment products to customers.

CIC, founded in late 2007 and the youngest major player of the world's sovereign fund families, has set up client-like relationships with many banks and funds already, relying on external asset managers for some investment areas where it is not strong enough to play alone.

For example, CIC committed $800 million in a new $6-billion global Morgan Stanley real estate fund late last year, thereby allowing CIC to become an investor of the fund as well as a client of Morgan Stanley in the real estate investment area.

CIC was also reported by Britain's Independent on Sunday last month to be one of six companies interested in lending cash to Glencore in return for a stake in the trading house.

Commodities is a relatively new investment area for CIC.