China’s Citic Makes Historic $10 Billion Deal

By Lauren Dodillet 

Chinese state-owned investment company Citic Group announced that it will sell a 20 percent stake in its Hong-Kong based subsidiary Citic Ltd. to CT Bright—the 50-50 joint venture of Japanese Itochu Corporation and Thai Charoen Pokphand Group Company Ltd.—for $10 billion, according to the New York Times. Approval of the deal remains subject to regulators and Citic shareholders.

The deal will take place in two parts: Citic will sell 2.5 billion shares for $4.4 billion in April and 3.3 billion more for $5.9 billion in October, according to Itochu’s announcement.

While some analysts say the move is risky for the Japanese half of the joint venture, which is borrowing to finance the deal, Itochu’s President Masahiro Okafuji has said the investment is long term. If the deal goes south, he told Reuters, the company can always sell its Citic shares. This is Itochu’s largest deal to date.

Citic Group is one of China’s largest and oldest conglomerates, and is one of the first state-owned enterprises (SOEs) to open its doors after Chinese President Xi Jinping announced last year that SOEs would benefit from private investment. Charoen and Itochu are no strangers to China either; Charoen, Thailand’s largest private company, became one of the first companies to do business there after former President Deng Xiaoping’s economic reforms opened the country up in the 1970s. Itochu’s former CEO was appointed Japan’s ambassador to China in 2010.

(Photo from Flazingo Photos via Flickr)