China to Buy GM Pension Plan Assets
Created: 2012-07-19 10:35 EST
China has agreed to buy General Motor Company’s investment stakes held by the company’s pension plan assets. GM’s pension plan is funded by private equity funds managed by companies like Carlyle Group, Blackstone and CVC Capital Partners.
The deal involves the transfer of GM stakes to the State Administration of Foreign Exchange, or Safe, and Safe will in turn pay $1.5 billion to $2 billion.
Safe currently holds nearly $3 trillion of China’s foreign exchange reserves. Nearly half of these reserves are invested in US government bonds.
The deal has not yet been finalized and is being kept confidential.
The Financial Times report quoted one investment advisor saying “There is clearly concern about selling US assets to China, especially in an election year.”
Investments in pension and private equity funds are usually illiquid assets—investors normally maintain investments for 10 years unless they find buyers for their private equity fund stakes.