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Cnooc, General Electric plan PE fund

05-14-2010 15:09 BJT

BEIJING, May 14 -- China National Offshore Oil Corp (Cnooc) and global conglomerate General Electric Co (GE) are considering setting up a 3 billion yuan private equity (PE) fund, a source familiar with the matter said on Thursday.

Both companies will hold identical stakes of 50 percent each in the fund. The fund will be used for investments in several sectors including domestic and global energy projects, the source said on condition of anonymity.

Analysts said the move would boost Cnooc's asset management and investment capabilities. It also lends credence to the offshore oil explorer's efforts to develop itself into an integrated energy company.

China's two leading oil companies, PetroChina and Sinopec, have already got strong financial businesses. Hence it is only natural for Cnooc also to consider a financial sector extension, said Liu Gu, an analyst with Guotai Jun'an Securities in Shenzhen.

Cooperation with GE would help Cnooc improve its risk management capabilities, said Lin Boqiang, a professor at Xiamen University.

"Cnooc will benefit from GE's professionalism and rich experience in managing assets," he said.

Analysts said Cnooc would gain from GE's strong global network and have better access to overseas investment opportunities.

Cnooc President Fu Chengyu told reporters earlier that the company was in talks with potential partners for investment opportunities, but said it would opt for a cautious approach as it also needs to ensure good returns for investors.

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