CIC Buys into New Energy      

China Investment Corp. (CIC) and GCL-POLY Energy Holdings Limited (HK: 0380) reached a binding framework agreement on November 19th, 2009 in which CIC will buy about 20% of the company for around HK$5.5 billion. CIC agreed to buy 3.108 billion new shares at HK$1.79 apiece in the GCL-Poly share placement. CIC also intended to set up a joint venture with GCL-Poly to invest and develop solar power stations and other photovoltaic projects. The two sides plan to pool US$500 million initially into the venture, in which GCL-Poly will hold a 51% stake.
   The share placement plan is pending the signing of a definitive agreement and the approval by the shareholders. Once completed, CIC will become the second-largest shareholder in GCL-Poly.
   GCL-Poly is originally engaged in businesses including heat and power co-generation, solid waste incineration and wind power in China. In July 2008, GCL-Poly acquired 100% of Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd. for HK$26.35 billion to strengthen its photovoltaic business.
   GCL-Poly's profit totaled RMB1.92 billion in the first nine months of 2009, with a gross margin of 38%, according to its earnings report. The company sold 3 603 tons of polysilicon and 25.2 megawatts of silicon wafer during the period. The average production cost for polysilicon was US$41.7 per kilogram.
   GCL-Poly also plans to invest RMB600 million to build a 20 MW solar PV project in Qingshanquan town, Jiawang district, Xuzhou city, which is set to start producing power by the end of 2009.  (CCR2009 No. 33)
   The company expects its total polysilicon production capacity will reach 18 000 tons by the end of 2009, and 21 000 tons in 2010. Polysilicon production in 2009 is expected to be 7 500 tons. It also plans to expand silicon wafer capacity to 2 GW by the end of 2010.
    Background
    CIC, which had made stronger investment in the financial industry in 2008, appeared to be favoring resource, property and new energy industries for 2009.
   Market sources said CIC plans to buy US$300 million to US$400 million of stock in China Longyuan Power Group Corp's Hong Kong initial public offering. Longyuan, China's leading wind power producer and a subsidiary of China Guodian Corp, has gone public in Hong Kong since December 10th, 2009.
   CIC has bought a stake in Canadian miner Teck Resources for US$1.5 billion in July 2009, an 11% stake in Astana, Kazakhstan-based JSC KazMunaiGas Exploration Production, the London-traded unit of Kazakhstan's state-run energy company, for about US$939 million in September, and invested US$500 million in Canada's SouthGobi, a coal miner, in October. And in November, the sovereign wealth fund bought a 15% stake in Arlington, Virginia-based AES Corp for US$1.58 billion and acquired a 35% interest in the US power producer's wind power operations for US$571 million.