Securities and Exchange Commission Chairman Christopher Cox says he is keeping a watchful eye on sovereign wealth funds, the investment arms of governments, and their impact on the U.S. market, particularly in light of recent deals involving these specialized investment vehicles, Citigroup Inc. and Blackstone Group LP.
Continue reading below
Most recently, on Monday, Citigroup announced that it had sold a $7.5 billion, 4.9% stake to sovereign wealth fund Abu Dhabi Investment Authority. Prior to that deal in May, newly created Chinese state-controlled sovereign wealth fund China Investment Corp. took a 9.4% $3 billion stake in the buyout shop Blackstone.
But instead of focusing on these transactions, Cox said in an interview with The Deal that he is concerned about the future growth of sovereign wealth funds and their opaque nature. He expressed reservations about how there is no separation between the regulator and investment vehicle when it comes to the funds.
“This is really a question of where we’re headed and whether or not there might be some fundamental change that results in the years ahead,” Cox said. “There is no question in today’s market that it is a private-sector, private-investor-driven market. Particularly in America, government ownership is not the order of the day, but we can look around the world and see that government ownership is preponderate in many countries, and the legal systems are very different.” — Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
