China Investment Corp., or CIC, the Chinese government's investment division, is in talks on taking a minority stake in power-plant developer and utilities operator AES Corp. (AES), the Wall Street Journal reported Monday, citing people familiar with the matter.
The possible deal, which is part of a wide-ranging discussion aimed at building an alliance between AES and CIC, could result in CIC taking a significant stake in Arlington, Virginia-based AES, which has a market capitalization of about $9.5 billion, the report noted. CIC, China's sovereign wealth fund, has some $300 billion in assets.
In addition, the two parties reportedly are in talks about a joint venture between them, in which CIC would contribute capital to AES' plans to develop power plants around the world.
AES' about two-thirds of investments are in the power-generation business and one third in utilities. The company owns 14 utilities that serve 11 million customers, including customers in Indianapolis.
AES has a significant power-plant development business, however, it has had little presence in China, one of the fastest-growing markets. The company has about 200 megawatts of wind-generating capacity under construction in China, half-owned by a Chinese partner, Guohua Energy.
CIC's move is seen as part of China's growing interest in diversifying its $2 trillion in foreign-currency reserves. CIC and other Chinese state-controlled companies recently have bought assets around the world, including oil-and-gas producers, stakes in U.S. financial companies Blackstone Group LP (BX) and Morgan Stanley (MS), and a large position in Canadian miner Teck Resources Ltd.
AES closed Friday's regular trading session at $14.15, up $0.01 or 0.07%, on a volume of 4.2 million shares.
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