Kuwait SWF agrees to invest USD 200m in China railway

11 October 2019 - 12:00 am UTC

Kuwait’s sovereign wealth fund has bought into a CNY 60bn (USD 8.5bn) Chinese high-speed railway project, the first investment by a Middle Eastern institutional investor in the asset class in the world’s second-largest economy.

The Kuwait Investment Authority – the world’s fourth-largest SWF with USD 600bn assets under management – signed an agreement yesterday with CICC Capital, ABC Financial Asset Investment and the Shandong Railway Investment Group to buy an equity stake in the Jinan-Qingdao High-speed Railway, according to a CICC statement sent to Inframation today.

A China-based Kuwait Investment Agency official confirmed the investment but declined to disclose the transaction details. CICC Capital is investing on behalf of KIA, said two sources familiar with the matter. The provincial government-owned Shandong Railway will sell a 7.2% stake in the 308km operating railway to CICC HSR Investment Fund and ABC Financial for a combined CNY 2.4bn.

CICC Capital is the private equity arm of China International Capital Corporation, the Asian nation’s largest investment bank. ABC Financial is the debt-to-equity swap business arm of the Agricultural Bank of China, one of the country’s four biggest commercial lenders.

KIA contributed USD 200m to the CICC HSR Investment Fund as the LP, according to the CICC statement, adding that the investment vehicle agreed to invest CNY 1.4bn into the railway as a new strategic investor. The Agricultural Bank of China will invest CNY 1bn through ABC Financial. CICC Capital also serves as the lead coordinator of the introduction of the two new investors.

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