SENNA

China's CIC Nears $1 Billion Sale of U.S. Private Equity Stakes

China's sovereign wealth fund, China Investment Corporation (CIC), is close to selling a portfolio of U.S. private equity stakes worth around $1 billion, according to people familiar with the matter.

The move comes as CIC, one of the world's largest sovereign wealth funds, looks to rebalance its global investment portfolio amid rising economic and geopolitical tensions between China and the West. The sale would represent a significant pullback of CIC's exposure to U.S. private markets.

The portfolio includes stakes in several U.S. private equity funds, the sources said. CIC has been working with an investment bank to facilitate the sale, which could complete in the coming weeks, they added.

The potential deal underscores the shifting dynamics in the global alternative assets landscape, as geopolitical factors increasingly shape the investment decisions of large sovereign funds. CIC's move aligns with a broader trend of Chinese investors paring back their exposure to U.S. assets.

"This is part of CIC's ongoing efforts to diversify its portfolio globally and manage its risk exposure," said one of the people, who declined to be identified as the discussions are private.

CIC manages over $1.2 trillion in assets and has been an active investor in U.S. private equity, real estate and other alternative assets in recent years. However, growing tensions between China and the U.S. have prompted greater caution among Chinese investors.

The proposed stake sale comes at a time when deal activity in the U.S. private equity secondary market has been robust, fueled by institutional investors looking to rebalance their portfolios. Secondary volume reached a record $134 billion globally in 2021, according to data provider Evercore.

Industry bankers say large sovereign wealth funds like CIC have been among the most active sellers in the secondary market, as they seek to optimize their exposures.

"Sovereign wealth funds have been very active on the selling side, taking advantage of strong buyer demand to manage their portfolios," said a senior private equity banker, who declined to be named.

The potential CIC deal would be one of the largest secondary transactions involving a Chinese state-owned investor's U.S. private equity holdings. It underscores the shifting sands in the global alternative assets landscape as geopolitical forces reshape cross-border capital flows.