If this fund management thing doesn’t work out, Tu Guangshao has great potential as a broker
America’s Trump administration has made headlines with its taste for “alternative facts,” and now the leadership of mainland sovereign wealth fund China Investment Corporation seems ready to adopt this flexible approach to reality as it lobbies for more favorable treatment for Chinese investment in the US.
In an exclusive interview published in the Wall Street Journal today, CIC president Tu Guangshao, whose fund spent $1.7 billion on Manhattan real estate last year, told a Beijing-based reporter that, “We can’t even name one symbolic direct investment in America,” while explaining that “US regulators have been hard on us.”
CIC Among Manhattan Real Estate’s Biggest Investors Last Year
The fund, which has been China’s biggest buyer of overseas real estate assets, made its first acquisition in the US last May, directly acquiring a 49 percent interest in the 1 New York Plaza office tower from Brookfield Property Partners for $700 million.
CIC, which owns extensive real estate portfolios in Europe and Australia, went on to buy a 45 percent stake in a building in New York’s iconic Rockefeller Center in December, picking up that interest from CPPIB for $1.03 billion.
Together the two commitments made CIC one of the biggest single investors in New York real estate in 2016.
Opening a New York Office For the First Time – Again
CIC’s $1.03b purchase of a stake in part of Rockeller Center, helped make it one of the biggest investors in NYC real estate for 2016
The interview implied that Tu and CIC, which helps invest China’s $3 trillion in foreign exchange reserves, were ramping up their investment efforts in the US following meetings in April between Trump and Xi Jinping in Florida.
As evidence of the China’s new willingness to deal with the US following the April meetings, CIC is relocating its sole overseas representative office from Toronto to New York this week, according to the Journal account. The choice of a new office is seen as evidence of a new level of commitment by the sovereign wealth fund to investing in US opportunities.
An account by the official China Daily from December 2015 tracks the opening of a CIC office in Manhattan, with Zhai Fan appointed as the government body’s representative in the city. The China Daily story cites a CIC statement as indicating that the office “will serve as a platform to deepen the exchanges and cooperation with local institutions and to further explore investment opportunities for CIC in US and the Americas.”
CIC Lobbies for Less Investment Oversight
Despite setting up its sole overseas representative office in New York nearly 18 months ago and making its first investments in US real estate last year, Tu implies that his office, which has made $200 billion in overseas investments to date, might do more US deals if controls were less stringent.
Tu cites the “overly strict scrutiny and opaque investment-review process” that the US government has applied to foreign investors as an impediment to having more Chinese funding directed into American projects. To date, CIC has not had any real estate deals rejected by CFIUS (the Committee on Foreign Investment in the United States).
China’s Anbang Insurance, which was recently punished by Chinese regulators for improper fund-raising practices, has had two deals run afoul of US authorities. The insurer, which has been linked to the families of former high ranking Chinese officials, had its attempted acquisition of the Hotel del Coronado in San Diego blocked by CFIUS last year, as the famous seaside resort is located near a major US naval base.
Anbang’s attempted $1.6 billion acquisition of US insurer Fidelity & Guaranty made it past CFIUS, but foundered when the company declined to give adequate details of its ownership structure to regulators in New York and Iowa where Fidelity & Guaranty has offices.
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