By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2008-03-06 17:38

China Investment Corporate Ltd (CIC), the nation's sovereign wealth fund, will hold its Blackstone stakes for five to seven years, Finet, a financial services provider in Greater China, reported today citing Wang Jianxi, deputy general manager.

"The CIC won't gain only from share price fluctuations in the Blackstone deal," Wang said yesterday, adding the investment group can also profit from dividends.

Blackstone's share price dropped sharply, but Wang said CIC won't be bothered by short-term changes in Blackstone and Morgan Stanley share prices, as the government-funded investment arm is a long-term financial investor.

He also said CIC won't rule out the possibility of holding the Blackstone stake for longer if yields are good in the future.

Wang added that in terms of private equities' net income and profit in the United States, Blackstone still came out on top of the list.

At the same time, Wang admitted that CIC will not buy any more financial assets like Blackstone and Morgan Stanley, as sovereign wealth funds are not tolerant of high risks.

CIC was set up in September 2007 with an initial capital of US$200 billion drawn from China's massive foreign exchange reserves.

In December last year CIC agreed to take a US$5 billion stake in US-based Morgan Stanley. It also invested US$3 billion in Blackstone Group and put US$100 million into the China Railway Group initial public offering in Hong Kong.