China Buys 0.46% of British Gas Firm BG

China had bought a 0.46 per cent stake in BG Group, Britain's third-largest gas producer, and analysts say it might raise its shareholding further, according to published reports.

Fred Lucas, an analyst at London brokers Cazenove Group, said an analysis of BG's share registration data showed the People's Bank of China bought 15.5 million shares in the company between June 15 and July 13, Bloomberg News reported.

The news agency cited a BG spokeswoman as confirming that the Chinese central bank was a shareholder but declined to specify its stake.

A PBOC official in Beijing declined to comment but said the central bank did not have any direct investment business.

Eurasia Group, a New York intelligence advisory firm, said the PBOC made the purchase on behalf of China's fledgling state investment corporation.

An investment arm of the central bank did the same in May when it bought a stake of just less than 10 per cent in United States private equity fund Blackstone Group on behalf of the new fund, which has yet to be formally established.

Eurasia said the stake in BG Group was consistent with the sovereign wealth fund's increasingly aggressive outbound strategy.

The investment firm, being set up to manage US$200 billion (HK$1.56 trillion) of China's US$1.33 trillion in foreign exchange reserves, is likely to be called China Investment Corp (CIC).

"The CIC will almost certainly increase its very small initial investment in BG Group, raising the prospect of a potential future takeover bid," Eurasia Group said in a note.

Bloomberg cited Mr Cazenove as agreeing: "Given the scale of US dollar reserves that it is understood to be trying to redeploy for higher returns, there ought to be potential for it to buy a much larger stake", the firm said in a note.