Source: Telegraph
Liverpool bid always a step too far for Chinese
China Investment Corporation has $200 billion of spare cash from China's vast foreign exchange reserves but it has been bruised by high-profile investments in the past. [LNB]On Thursday, a source inside the fund confided to the Financial Times that Liverpool are simply too symbolic and risky for the Chinese government to consider seriously. 'Next they will say CIC is going to buy Playboy,' he said. [LNB] Related ArticlesKirdi wants Liverpool deal by start of seasonChinese view: CIC move 'implausible'Premier League's Foreign Legion10 Liverpool transfer targetsLiverpool takeover: full coverageClub hunting? How Blackburn tops LiverpoolRun by 57 year-old Gao Xiqing, one of China's 'princelings' whose father served in Chairman Mao's Red Army, the fund has spent the last year trying to steer clear of controversy. [LNB]Gao, who has a law degree from Duke University in the United States and who worked as an associate in Richard Nixon's former Wall Street law firm, became a target for widespread abuse in China shortly after the fund was founded in 2007. [LNB]Given an initial $200 billion to invest by the government, his decision to put $5 billion into Morgan Stanley and $3 billion into Blackstone, the venture capital firm, was pilloried when the investments evaporated. [LNB]When he continued to hold his shares in Wall Street as the crisis ate away at their value, he came under more fire. 'People here hate it,' he told The Atlantic magazine in 2008. 'They say: 'Why the hell are you trying to save those people [bankers]? You are the representative of the poor people eating porridge, and you are saving people eating shark fins [a rich man's delicacy in China]!'[LNB]Since then, Gao has played his cards more conservatively. 'They have been trying to rebuild their reputation,' said Arthur Kroeber, the managing director of GaveKal, a Beijing research team. 'They made a 12 per cent return on investment last year,' he said, adding that the approach for debt-ridden Liverpool had been 'highly implausible'. [LNB]Last year, CIC invested mainly in financial funds that automatically tracked the US market. When Gao did decide to buy stakes in companies, the fund stuck exclusively to the old-fashioned energy and mining sectors. [LNB]CIC's taste for fossil fuels does not seem to have been tempered by the presence of Lord Nicholas Stern, the author of the government's review on climate change, on the fund's advisory board. [LNB]Meanwhile, Kenneth Huang, the Hong Kong businessman who is allegedly fronting the Liverpool bid, does not appear to have any previous connection to CIC and nor has the fund ever done a joint investment with a private individual. According to its annual report, CIC seeks 'long-term sustainable' investments and never tries to buy 'control in any company'. [LNB]Insiders also questioned whether CIC would have to seek permission from the government's State Council before buying any 'strategic' assets. Kroeber said: 'They have a lot of money, but would they need to ask for permission? I do not think we know the answer.'[LNB]A spokesman for Huang would only say that he is now 'somewhere in Asia' amid rumours that a different Asian sovereign wealth fund could be involved. [LNB]
