Visible face of CIC investment

Heathrow is one of the world's busiest international airports where a plane lands or takes off every 147 seconds. The airport handled more than 70 million passengers last year. CIC officials indicated that the fund zeroed in on the Heathrow deal as it offered long-term and stable returns and suited the operator's plan to attract overseas investment for asset upgrades.

"Thanks to its pricing regulatory regime, Heathrow has an advantageous market position and can provide inflation-protected and stable returns for its investors," the CIC said in its earnings report for 2012. "As an unlisted infrastructure asset of high quality, it maintains a low correlation to other asset classes and suits the CIC's diversification objectives well."

In January, the CIC bought an 8.86 percent stake in Thames Water, the largest water and sewage company in the UK owned by Kemble Water, a consortium of investors led by Australian bank Macquarie.

Liu Fangyu, a CIC official, had indicated last year that the fund would look to strengthen its post-investment management of long-term assets, as well as continue to build up its portfolio in infrastructure, agriculture and other projects that generate steady returns.

Lou Jiwei, the former chairman of the CIC, had earlier remarked that as a financial investor, the fund would seek to diversify risks by investing in various industries. Last year, the Chinese sovereign wealth fund bought a 7 percent stake in Eutelsat Communications SA, a French satellite operator for broadcast and broadband, in a 386 million euro deal. It also injected a total of $600 million into two Russian companies in the resource and energy industry.

Liu Yihui, an expert with the Financial Research Center of the Chinese Academy of Social Sciences, says the CIC has made the right moves by adjusting the investment portfolio according to the dynamic global economic environment.

Direct investment in infrastructure, especially in a region that struggles with debt issues, is not only a good opportunity for Chinese enterprises to accelerate its "going global" steps, but also a relatively "smart method" to diversify foreign exchange resources, apart from the treasury bond purchases that the CIC conducted before. "The most important gain from the European moves has been the better risk management systems that enable flexible strategy adjustments when the external investment situation changes," Liu says.

Fund officials have indicated that Europe would continue to be one of the top destinations because the continent is home to many strong, well-balanced companies that could gain from overseas investment. In fact, some fund officials have expressed confidence that Europe will account for more than 20 percent of its diversified investment portfolio.

The CIC has also signed an agreement with Federal Holding and Investment Co of Belgium to set up the China-Belgium Mirror Fund, a mutual fund to help Chinese companies expand their investments in European countries.