BEIJING -- China InvestmentCorp. said Tuesday it had agreed to invest US$500 million in Canadian company SouthGobi Energy Resources Ltd., a unit of Ivanhoe Mines Ltd.
The investment is in the form of a 30-year secured debenture issued by SouthGobi and is convertible into the company's common equity, CIC said in a statement on its Web site.
CIC said Citigroup Global Markets Asia Ltd. acted as its financial adviser on the deal.
The deal is the latest by China's US$300 billion sovereign wealth fund, which has been active in recent months in investing in energy and resources sectors around the world.
CIC Chairman Lou Jiwei said in an interview with the People's Daily last week that the fund would seize investment opportunities within reasonable risk levels after the pullback in asset, stock and commodity prices due to the global financial crisis had created long-term investment value.
On Friday, Alexander Molyneux, president and chief executive of SouthGobi, a company with coal mining and exploration assets in Mongolia, had said that his firm was in talks with sovereign wealth funds for potential "cornerstone investment opportunities' in SouthGobi.
SouthGobi mines coal in Mongolia's South Gobi region and in East Kalimantan in Indonesia. Its flagship coal mine in Ovoot Tolgoi in Mongolia sells coal to customers in China.
A person with direct knowledge of the matter told Dow Jones Newswires on Friday that SouthGobi planned to raise US$250 million in an initial public offering in Hong Kong, which he said hopefully would happen in the first quarter next year.
