China Investment Corporation is preparing to sell approximately $1 billion worth of U.S. private equity fund stakes in the secondary market, according to multiple people familiar with the matter, as the $1.33 trillion sovereign wealth fund moves to rebalance its portfolio against the backdrop of escalating tensions between Beijing and Washington.
The assets being sold are held across funds managed by eight U.S.-based firms, including Blackstone Inc. and Carlyle Group. The portfolio includes investments CIC made between 2016 and 2017 and is approaching the end of its typical private equity cycle. CIC has retained Evercore as an adviser and aims to close the sale by the end of June, though that timeline and total valuation remain contingent on market interest and pricing, sources said.
Blackstone and Carlyle declined to comment. CIC and Evercore also did not respond to inquiries. All individuals familiar with the deal requested anonymity due to its sensitivity.
Reuters first reported the potential sale, which comes amid reports that CIC and other Chinese state-backed investors have frozen new commitments to U.S. private equity firms. The Financial Times reported last week that several Chinese funds were halting allocations to U.S. general partners as trade and regulatory friction deepens. CIC has not publicly addressed that report.
The planned divestiture arrives as secondary market volume hits record highs. According to Secondaries Investor, secondary transactions totaled $160 billion last year, driven by asset managers and allocators seeking liquidity amid limited M&A and IPO exit opportunities.
Potential buyers of the CIC portfolio include sovereign wealth funds, secondaries-focused asset managers, and family offices. One source said Singapore's GIC is among the interested parties. GIC declined to comment. The sale could occur in tranches or as a block deal depending on buyer appetite and price negotiations.
Founded in 2007, CIC is tasked with diversifying China's foreign exchange reserves through global investments. As of December 31, 2023, CIC reported $1.33 trillion in assets under management, with 64% outsourced to external managers. U.S. equities comprised 60.29% of its overseas public equity holdings, while public stocks accounted for 33.13% of the total portfolio.
CIC's cumulative annualized net return since inception stood at 6.23% at the end of 2023, with a 10-year net return of 6.57%. The fund has been a prominent limited partner in top-tier U.S. private equity firms and previously co-launched a $2.5 billion fund with Goldman Sachs in 2017 aimed at investing in companies positioned to benefit from U.S.-China collaboration.
