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China investment fund buys 12% of SMIC
4/18/2011 2:50 PM EDT
SAN FRANCISCO—Chinese foundry Semiconductor Manufacturing International Corp. (SMIC) said Monday it has received an investment of $250 million from China Investment Corp. (CIC), a Chinese-government backed venture capital fund.
The investment appears to be related to China's decision to provide additional support to the IC industry in the country over the next five years, as reported by the official Chinese news agency, Xinhua.
For $250 million, CIC will acquire 360,589,053 convertible preferred shares of SMIC, the company said.. After issuance and conversion of the new shares, CIC will own approximately 11.6 percent of SMIC's outstanding share capital, SMIC said.
The agreement also provides CIC with warrants for investing an additional $50 million in SMIC on the same terms, and entitles CIC to nominate one member of SMIC's board of directors, SMIC said.
Jiang Shangzhou, chairman of SMIC, said in a statement that CIC's investment ".provides a source of capital that allows us to take full advantage of our project pipeline." He added, "Partnering with CIC is conducive to realizing our development objectives and enhancing our competitive advantage in the international arena."
The agreement between SMIC and CIC is subject to customary conditions, regulatory approvals, and shareholder approval, SMIC said.
CIC's charter is to seeks stable and long-term risk-adjusted financial return. The firm says it is operated strictly on a commercial basis.
The investment appears to be related to China's decision to provide additional support to the IC industry in the country over the next five years, as reported by the official Chinese news agency, Xinhua.
For $250 million, CIC will acquire 360,589,053 convertible preferred shares of SMIC, the company said.. After issuance and conversion of the new shares, CIC will own approximately 11.6 percent of SMIC's outstanding share capital, SMIC said.
The agreement also provides CIC with warrants for investing an additional $50 million in SMIC on the same terms, and entitles CIC to nominate one member of SMIC's board of directors, SMIC said.
Jiang Shangzhou, chairman of SMIC, said in a statement that CIC's investment ".provides a source of capital that allows us to take full advantage of our project pipeline." He added, "Partnering with CIC is conducive to realizing our development objectives and enhancing our competitive advantage in the international arena."
The agreement between SMIC and CIC is subject to customary conditions, regulatory approvals, and shareholder approval, SMIC said.
CIC's charter is to seeks stable and long-term risk-adjusted financial return. The firm says it is operated strictly on a commercial basis.
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