CIC Buys 15% in AES

Who? What? CIC stands for the Chinese Investment Corporation. CIC is a sovereign wealth fund for the Chinese Government that is buying up natural resources all over the world. Yesterday it was announced that CIC is buying a 15% interest in AES, an American based power generation company:

A CIC unit will buy 125.5 million in new shares for $12.60 each, or $1.58 billion, Arlington, Virginia-based AES said today in a statement. CIC will own about 15 percent of the power company. AES also signed a letter of intent to sell a 35 percent interest in its wind-power operations to CIC for $571 million.

The emphasis on that last sentence was mine. Of course AES executives are spinning this as a great thing for the company:

Emerging Markets at Record 24% of World Equity, China Snapping up Commodities

Emerging Markets Take Record Share of World Equity:

Developing countries’ share of worldwide equity value climbed to a record as the fastest- growing economies lured investors amid the first global recession since World War II.

The 22 nations classified as “emerging” by index provider MSCI Inc. comprised 24 percent of world market capitalization, up from 18 percent at the start of this year, the highest proportion since Bloomberg began compiling the data in 2003. China shares surpassed $3 trillion yesterday for the first time since August, from $1.8 trillion at the end of 2008.

So while they pour money into emerging economies the established nations are contracting.

As pointed out previously we have a wealth transfer going on.