January 22, 2015


CP, Itochu invest US$10.4 billion to gain China access




Charoen Pokphand Group and Japanese trading house Itochu are investing US$10.4 billion in Chinese conglomerate Citic Group to gain access to highly regulated Chinese business sectors, AFP reports.


The deal would see the pair acquire a 10% stake in Citic for HK$34.4 billion (US$4.4 billion) and invest another HK$45.9 billion in convertible preferred shares, which could eventually double their stake in the Chinese group.


By investing in politically-linked Citic, the two companies would likely gain easier access to highly regulated Chinese business sectors, including resource development, logistics and real estate.


Itochu is Japan's third-largest trading house with distribution networks worldwide, and has strong links to China - its former chief executive Uichiro Niwa previously served as Japan's ambassador to China.


Citic is involved in a range of industries, from banking and brokerage services to real estate and construction.


However, the company is still mostly focussed on the local market. The deal could help it tap new markets in emerging economies such as Africa and Latin America, using Itochu's and CP's vast networks in food distribution and resource development, according to Nikkei Business Daily.

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