People's Bank of China buys stake in BG
Updated: 2007-08-01 16:38
China has bought a 0.46 per cent stake in BG, Britain's third largest gas producer, and analysts say it might raise its shareholding further, according to published reports.
Fred Lucas, an analyst at London brokers Cazenove Group, said an analysis of BG's share registration data showed the People's Bank of China (PBOC) bought 15.5m shares in the company between June 15 and July 13, Bloomberg News reported.
The stake is worth around £125m ($254m) at BG's closing share price on Tuesday of 808 pence.
The news agency cited a BG spokeswoman as confirming that the Chinese central bank was a shareholder but declined to specify its stake.
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Eurasia Group, a New York intelligence advisory firm, said the PBOC made the purchase on behalf of China's fledgling State investment corporation.
An investment arm of the central bank did the same in May when it bought a stake of just under 10 per cent in US private equity fund Blackstone Group on behalf of the new fund, which has yet to be formally established.
Eurasia said the stake in BG was consistent with China's increasingly aggressive outbound strategy.
The sovereign wealth fund, being set up to manage $200 billion of China's $1,330 billion in foreign exchange reserves, is likely to be called China Investment Corp (CIC).
"The CIC will almost certainly increase its very small initial investment in BG Group, raising the prospect of a potential future takeover bid," Eurasia Group said in a note.
Bloomberg cited Cazenove as agreeing: "Given the scale of US dollar reserves that it is understood to be trying to redeploy for higher returns, there ought to be potential for it to buy a much larger stake," the firm said in a note.
In addition to the wealth fund's two known shareholdings, State-owned China Development Bank last week bought an initial stake of 3.1 per cent in Barclays Bank.
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