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Chinese state to pick up GM pension plan private equity commitments

19 Jul 2012

China’s government plans to become a major investor in some of the world’s largest private equity funds by picking up stakes currently held by the General Motors pension plan.

The State Administration of Foreign Exchange (SAFE) will pay up to $2bn for GM’s position in top funds managed by buyout giants including Carlyle, Blackstone and CVC Capital, according to the Financial Times.

SAFE, which manages more than $3tn of China’s foreign exchange reserves, the report said, is being advised by secondaries specialist Lexington Partners on the deal.

The sale marks an increasing trend for large LPs looking to diversify their private equity portfolios to lower risks.

In May it emerged China Investment Corporation, the country’s $410bn sovereign wealth fund, had received an extra $30bn from SAFE to invest in European assets.

That meant CIC has spent around $200bn of China’s vast pool of foreign exchange reserves since the Ministry of Finance issued RMB1.55tr in special yuan bonds, which were swapped for foreign currency when CIC was set up in 2007.

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