CHINA bought a stake in BP Plc, its second investment in an European oil company, as the nation seeks to secure resources and boost returns on the world's largest foreign-exchange reserves.
BP, Britain's largest company by market value, is aware a Chinese sovereign fund bought shares and welcomes the investment, spokesman David Nicholas said yesterday. The fund purchased just less than 1 percent of BP, worth about 1 billion pounds (US$1.97 billion), the Daily Telegraph reported.
The BP stake adds to Chinese investments in France's Total SA, Europe's third largest oil company, and Rio Tinto Group, the world's third-largest miner. China is buying assets across the globe as commodity prices rise to records and as its foreign currency reserves swell to US$1.68 trillion, according to Bloomberg News.
"It could be the beginning of a wave of investments in major oil companies as oil prices keep racing higher," said Victor Shum, senior principal at energy consultant Purvin & Gertz Inc in Singapore. "It shouldn't raise any political concern as the Chinese are not gaining management control. It's passive."
China Investment Corp, the nation's US$200 billion sovereign wealth fund, last year spent more than US$8 billion on stakes in Blackstone Group LP, manager of the world's largest buyout fund, and Morgan Stanley, the second-biggest United States securities firm, Bloomberg News said.
"We're aware of the Chinese shareholding and we welcome all shareholders," said Nicholas. He declined to comment further.
BP shares have fallen 11 percent this year to 549 pence at the close in London on Monday. They gained 8.4 percent last year. Crude oil for May delivery rose to a record US$112.45 a barrel on the New York Mercantile Exchange. It was at US$112.43 at 10:48am in Singapore. Prices are up 77 percent from a year ago.
The UK government is aware of the stake-building by the fund, and is monitoring the situation closely, the Telegraph said. The holding in BP, with a capitalization of 104 billion pounds, was bought over a period of time, according to the report.