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date: 15 October 2019

Abstract and Keywords

This chapter briefly reviews the literature on sovereighn wealth funds (SWFs) with a focus on their investment characteristics and strategies. It describes the China Investment Corporation (CIC) with particular reference to its connections with the Chinese government. This is followed by analyses of hand-collected data based on 61 M&As, 8 JVs, and 28 fund investments made by the CIC 2007–15. The analyses focus on the formal control (equity stakes, voting rights, director nomination and board representation) of the CIC in its target firms, and on the indirect control benefits that the CIC can extract from them in their long-term post-investment relationships. The findings question the efficacy of proposals forcing SWFs to remain passive by suspending their voting rights, and suggest that SWF hosting countries should carefully consider the necessity and level of regulations directed at SWFs as a particular type of investors to guard against potential protectionism.

Keywords: sovereign wealth fund, China Investment Corporation, investment terms, shareholder rights, shareholder activism, corporate governance, government policy and regulation

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