China’s sovereign wealth fund has established a US$1 billion fund with the Middle East region’s biggest alternative asset manager to invest in companies among the Gulf Cooperation Council (GCC) and China, putting investment dollars behind warming relations between the two regions.

The Golden Horizon Fund, launched with Bahrain-based Investcorp Holdings, marks the first time that China Investment Corp (CIC), which has assets of US$1.35 trillion, has invested in the Middle East.

Qi Bin, executive vice-president and deputy chief investment officer with CIC, said that the partnership will strengthen economic relationships between China and the GCC countries.

“As one of the world’s largest sovereign wealth funds, CIC has been actively investing in both developed and emerging economies,” Qi said in the statement released on Wednesday. “During the past couple of years, we have built several bilateral funds with leading financial institutions to facilitate industrial cooperation between China and major economies in the world.”

Qi Bin, executive vice-president and deputy chief investment officer of China Investment Corp, speaks at an event in 2018. Photo: Handout

“Currently we are working closely with Investcorp to build a similar bilateral fund to strengthen financial and industrial ties between China and GCC countries.”

The announcement of the fund’s launch took place at Investcorp’s China-GCC Investment and Business Cooperation Summit in Riyadh. The event featured prominent speakers including Qi, and Ibrahim Al-Mubarak, Saudi Arabia’s assistant minister of investment, and representatives of CIC’s global private-equity partners Goldman Sachs and HSBC, as well as other industry experts.

Fred Ma Si-hang, an adviser to Investcorp, and Nicholas Ho Lik-chi, the commissioner of the Hong Kong government’s Belt and Road Initiative Office also attended the summit.

The new investment fund will be anchored by CIC and institutional and private investors from the GCC, according to the statement.

Target companies are expected to have high growth potential in attractive sectors, including consumer, healthcare, logistics and business services. The new vehicle also includes Investcorp Saudi Pre-IPO Growth Fund, which was launched in 2021 and focused on a diversified portfolio of companies at a pre-IPO stage of development in Saudi Arabia.

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“This is the first step in what we expect to be a fruitful relationship, and we look forward to making significant positive impacts on businesses in both regions,” said Hazem Ben-Gacem, co-CEO of Investcorp.

Efforts to strengthen economic ties between the Middle East and China have increased since a Middle East visit by President Xi Jinping in December 2022.

The fund is expected to focus on investing in GCC countries, with the intention of eventually bringing them to enter the mainland China market, showcasing a mutually beneficial arrangement, according to a source who is familiar with CIC’s investment strategy.

In the past, bilateral funds have generated impressive investment returns of over 20 per cent, the source said.

CIC, established in 2007, serves as a vehicle to diversify China’s foreign-exchange holdings through investments in public and private assets. With its three units, CIC International, CIC Capital Corp, and Central Huijin Investment, CIC manages a substantial portfolio of assets.

Investcorp has expanded into the infrastructure space and has a history of successful investments including ownership of brands like Gucci and Tiffany & Co.