Chinese fund Inventis advocates indirect route to North American energy

Wed Nov 28, 2012 1:50am EST
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By Ramya Venugopal

SINGAPORE (Reuters) - Inventis Investment Holdings (China) Ltd, one of China's oldest private equity firms, hopes it can succeed where the country's state-owned giants have failed in buying stakes in North American energy companies, the company's CEO told Reuters.

Bids by Chinese state firms have provoked political firestorms in the United States and Canada where lawmakers fear losing control of resources to state-run foreign firms. Notable cases include CNOOC's (0883.HK: Quote) failed 2005 bid for Unocal and more recently CNOOC's $15 billion bid for Canada's Nexen Inc NXY.TO.

A low-key investment by a private financial firm like Inventis may be more palatable for edgy Western politicians, said Inventis CEO Yong Kwek Ping, but opposition could be rekindled if Inventis exits its deals, as it plans to, by selling the stakes to Chinese state-owned companies.

Inventis, which has raised more than $1 billion to acquire overseas assets, plans to buy minority or majority stakes in small energy companies in Canada and the United States, he said. Investing in smaller companies and growing them for several years could reduce suspicions from foreign governments, he said.

"We need to invest in projects that China needs. Projects that involve China's security strategy...and one of the obvious targets will be energy and natural resources," he said. "It's extremely sensitive for the Chinese, particularly the three big state-owned oil companies, to get in directly, so they should take the indirect approach."

Inventis would consider selling those stakes to Chinese state companies later, he said.

"We have very good support from state-owned companies for this approach. So whenever we move into a project, we already have some idea who will be our next buyer."

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