China Investment Corporation’s purchase of an $856m stake in Noble Group, the commodities trading company, is the clearest indication yet that Beijing wants to secure agricultural commodities supplies after last year’s food crisis. The investment in a sector aligned so closely with the government’s strategic objectives marks a shift for the sovereign wealth fund, which is interested increasingly in deals that are linked directly to the perceived national interest.

When CIC was established in late 2007, officials assured the international community repeatedly that it was a purely financial investor whose main purpose was to earn higher returns on the country’s foreign exchange reserves, the bulk of which are invested in low-yielding US government securities.

But after intense domestic criticism of its high-profile, lossmaking investments in Morgan Stanley and Blackstone, CIC is focusing on deals that secure natural resources or help state-owned enterprises expand overseas, say people familiar with its operations. CIC has been involved increasingly in finding and funding acquisitions of natural resources assets, but following the reaction to its earlier deals it has gone to great lengths to conceal its investments from public scrutiny and has made a series this year that have not been announced.

In a statement disclosing the sale of 15 per cent to CIC, Noble said food was at the core of the deal. It had agreed to a partnership for the “purpose of jointly investing in infrastructure assets and supply chain management related to agricultural commodities”. Until now, China’s overseas investments in natural resources assets have focused on oil and minerals.

The price of food commodities such as rice, wheat and soyabeans surged to multi-decade highs in 2008, in part due to strong Chinese demand, triggering panic buying and a spate of export bans. Since then, countries including Saudi Arabia and South Korea have invested in overseas farm plots to increase their food security.

The farmland grab trend, which some see as neo-colonialism and others as a development opportunity, came to the fore after Daewoo Logistics of South Korea tried to secure a chunk of farmland in Madagascar. Noble, which is based in Hong Kong and listed in Singapore, has farm production in Argentina, Uruguay and Brazil, five owned port facilities throughout South America and soyabean crushing plants in China.

Richard Elman, Noble’s chief executive, said in a statement: “[CIC], like us, evaluate the evolution and success of a company over decades as opposed to merely fiscal quarters. We think the opportunities to work together over the coming decades will be tremendous.

Global companies looking for opportunities in China and protection from aggressive state-owned Chinese competitors expanding abr-oad were becoming more interested in selling stakes to CIC and other state-controlled investors, said one person who brings offshore investment opportunities to CIC regularly. “When we present deals to CIC now we have to pitch it in terms of how the investment will make Chinese companies more competitive globally or how it will benefit Chinese national interests in some other way,” this person said.

CIC’s offshore investment war chest of about $90bn and increasing activity make it a honey-pot for investment banks desperate to provide advice and show deal ideas. JPMorgan advised CIC on the Noble investment, with the latter advised by Bank of America Merrill Lynch.

Almost every bank in the region claims to be advising the Chinese fund on large potential deals, with many seconding staff to CIC to help develop its legal, compliance and management structures. A Hong Kong dealmaker and regular visitor to CIC’s Beijing offices said: “The CIC has become smarter over the past two years about how it is using advisers. Banks are slowly being segmented by CIC into areas of perceived expertise.”

As well as US real estate, investment bankers said CIC was looking at deals related to the resources sector, infrastructure and consumer industries. Bankers who have had dealings with CIC said it remained cautious about investing in the US and Europe as it was concerned about anaemic growth and currency weakness.

(By Jamil Anderlini, Javier Blas, Tom Mitchell and Sundeep Tucker, Financial Times / Blog do GRAIN, 23/09/2009)