Two banks involved with the General Motors Initial Public Offering next week are ICBC and CICC. Industrial and Commercial Bank of China is one of China’s four big central government banks. The other, China International Capital Corp.,is a joint venture run primarily by Central Huijin Investment Ltd., an arm of the state and Morgan Stanley.
For the first time, Chinese government banks are participating in a in a major U.S.-issued IPO. SAIC, GM’s partner in China, is finalizing plans to buy a roughly 1 percent stake, worth about $500 million, in GM’s IPO.
Other foreign investors that are interested include several sovereign wealth funds located in the Middle East and Asia. The Journal says those funds, which manage the finances of royal families and some nations, could invest $1 billion in GM’s IPO.
There could be political backlash for President Barack Obama, who has spent the past week in Asia addressing economic issues, like currency exchange differences between the U.S. and China. Obama has argued that China artificially deflates its currency, the yuan, in an attempt to make its exports cheaper.
The U.S. has become a popular haven for Chinese investors, second only to Australia in attracting Chinese stock investments, says Derek Scissors, a research fellow at conservative think-tank The Heritage Foundation. The first half of 2010 was a record year for China, Scissors says. China has sunk $45 billion into investments and engineering projects worldwide. About $1.6 billion of those investments came to the U.S.
Many Chinese automakers are looking for a way into the U.S. market because eventhough China is the largest car market in the world, the U.S. is still the most profitable.