CIC, Fortescue reportedly in talks on US$1-bln bond deal

Aug. 12, 2009 (China Knowledge) - China Investment Corp, the country's US$200-billion sovereign wealth fund, is in advanced talks with Fortescue Metals Group Ltd, Australia's third-largest iron ore producer, over a convertible bond investment of more than US$1 billion that would help the Australian firm finance its expansion, said two unnamed sources on Tuesday.

One of the sources said senior officials of the Chinese sovereign wealth fund last month paid a low-profile visit to Australia and held closed-door meetings with Fortescue to discuss the potential investment.

Spokesmen from the both companies declined to comment on the matter.

Fortescue, which aims to treble its annual output from the current 30 or 40 million tons, needs a fairly large amount of funding to do so, said James Wilson, an analyst with DJ Carmichael.

CIC earlier this month reported a net profit of RMB US$23.13 billion, with a 6.8% overall return on registered capital, though it recorded a negative 2.1% return on its global investment portfolio last year, according to an earlier report from China Knowledge.