CIC Banks On a Settlement with Bumi Resources

November 01, 2013 by Chris Wright

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ON OCTOBER 9 sovereign wealth fund China Investment Corp. (CIC) announced a deal with Indonesian mining company Bumi Resources to exchange $1.3 billion of debt for equity stakes in several of Bumi’s Indonesian coal extraction assets. The transaction, which finally released Bumi from its punishing schedule of interest payments to CIC, marked an end to the sovereign fund’s unusual foray into direct lending in Indonesia. By taking the asset swap, CIC also eased hidden tensions with the Abu Dhabi Investment Council, the sovereign wealth fund that had been on the opposite side of the same trade in Bumi since 2009. Ironically, the spectacle of two of the world’s most powerful sovereign wealth funds squaring off over a shared asset went almost unnoticed for years. Most of the media coverage centered on increasingly heated boardroom skirmishes between British financier Nathaniel Rothschild, a member of one of the most storied banking families…

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