CIC unit converts bonds for 12.5% stake in Uralkali

Chengdong Investment Corporation, a unit of mainland sovereign wealth fund China Investment Corporation (CIC), has converted its Uralkali bonds into a total of 12.5% ordinary shares, becoming the Russian potash producer's second largest shareholder, Uralkali says in a statement.


The bonds were purchased in November last year from Wadge Holdings which is beneficially owned by Uralkali's major shareholders Kerimov, Galchev and Skurov.


Upon the completion of the transaction, Suleyman Kerimov Foundation remains the largest single shareholder of Uralkali with a 21.75% stake, Galchev the third with 7% shares and Skurov the fourth with 4.8% shares. The remaining 53.95% shares are free floated.


The shareholding status will allow CIC to obtain more pricing and operational information of Uralkali and have more power in contract negotiation, analysts say.


Uralkali is world's No.1 potash producer by output, with a 20% share in the global potash fertilizer market. Its key markets are Brazil, India, China, Southeast Asia, Russia, US and EU.


The deal also simplifies the shareholding structure of Uralkali and makes it easier for the company's biggest shareholder Kerimov to quit, upon alleged demand by Belarus president Alexander Lukashenko.


Uralkali in July ended a potash joint venture with Belarus's Belaruskali, leading to a dispute between the two countries and a plunge in potash fertilizer price worldwide.


Entering into the potash fertilizer market is a part of CIC's development strategy. The wealth fund was established in September 2007, aiming to diversify the investment of China's US$3.5 trillion foreign reserves. Its registered capital was US$200 billion.


There are two subsidiaries of CIC - China Investment Corporation International and Central Huijin Investment. The former is responsible for investing and managing overseas assets while the latter holds controlling stakes in key state-owned financial institutions in China.


The Chinese wealth fund was appointed a new chairman and chief executive officer, Ding Xuedong, (丁学东) in July to succeed Lou Jiwei (楼继伟) who became China's finance minister in March. Prior to the appointment, Ding served as deputy secretary general of the State Council.


CIC posted a net income of US$77.4 billion for 2012, up 59.8% from a year earlier. Its investment returns jumped 70.9% to US$83.05 billion during the period.



25 Sep 2013


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