Irish

Monday 28 July 2014

Taoiseach's private meet with China Investment Fund boss

Nick Webb

Published 04/03/2012|05:00

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Sale of State assets to reap €3bn with bank stakes also on menu

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Taoiseach Enda Kenny held a private meeting with Gao Xiqing, the head of China Investment Corporation -- the world's largest sovereign wealth fund -- last November. The meeting, details of which emerged from a Freedom of information request submitted by the Sunday Independent, took place almost four months before the high-profile Chinese diplomatic visit in February.

The China Investment Corporation has more than €350bn in assets and dwarfs most of the world's other sovereign wealth funds. The organisation is an arm of the Chinese government and is staffed by top political insiders. The fund makes strategic investments in key sectors that help give China more clout.

Last August it spent €2.65bn to buy a near 30 per cent stake in GDF Suez, the European utility company partially owned by the French government.

The sovereign wealth fund has a track record of investing in energy and utility firms, making the meeting with Kenny even more relevant.

Two weeks ago the Troika agreed a deal with the Government which will see €3bn- worth of State assets sold off to bring down debt and fund job initiatives.

The Bord Gais Energy business as well as some non-strategic ESB power stations will be sold to investors. Plans to sell a minority stake in the ESB have been derailed partially due to pressure from the unions.

The Government may also seek to offload some non-forestry assets owned by semi- State firm Coillte. These include renewable energy assets and timber factories.

Also on the block is the State's 25 per cent stake in Aer Lingus. Last week Ryanair's Michael O'Leary reignited his interest in the stake, as Ryanair already holds a near 29 per cent chunk of the airline. Gulf airline Etihad is also said to be interested. The Taoiseach's diary released under FOI Act also reveals that he was due to meet up with Etihad Airways chief executive on Thursday October 6 last year.

While Bord Gais, ESB and Coillte energy assets may be on the menu for the Chinese, the vast sovereign wealth fund also has a voracious appetite for stakes in banks and financial services companies.

Knut Kjaer, who was appointed to the Irish National Pension's Reserve Fund by the late Brian Lenihan in April 2010, has also served on the International Advisory Council for the China Investment Corporation. The NPRF was used to bail out the banks and now holds the State's shareholding in AIB and Bank of Ireland.

The Government is desperately keen to offload some or all of its 99 per cent stake in AIB, with the car crash at Irish Life & Permanent and the former Anglo Irish Bank also up for grabs for any investor willing to make a massive punt on a recovery.

The China Investment Corporation spent around €2.72bn to buy a 9.9 per cent stake in Morgan Stanley in December 2007 as the credit crunch crippled US banks. It later paid €2.3bn to buy a 9.4 per cent chunk of private equity giant Blackstone. The fund also has a smaller shareholding in Visa.

The Government has declined to reveal whether the sale of banking or State assets was discussed in the meeting between the Taoiseach and Gao Xiqing last November. "Further to your query on the FOI on the Taoiseach's diary, the content of meetings is not generally disclosed," the Taoiseach's office told the Sunday Independent.

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