CIC’s Billions

Ashby Monk

I had an interesting email from Michael McCormack at Z-Ben today. He suggested that we may see the CIC receive an additional injection of up to $200 billion before the close of 2009 (i.e. in the next 6 weeks). This would bring the fund up to $500 billion! In McCormack’s words,

“CIC would like to close its 2009 book ready to accept the transfer of another USD200bn or more from foreign reserves. No-one doubts that CIC was designed to be an organization that manages sums far in excess of its current international portfolio of approximately USD110bn. It will not receive those additional funds, however, until it can show that it is fully invested and ready for more. In Z-Ben Advisors’ view, we may now be in the final weeks of CIC’s start-up phase, and the organization may in fact be gearing up for the receipt of yet another USD200bn+ of funding.”

The CIC will thus only receive the additional money if it can show that it has spent all the rest of its money, and it must do so in manner that shows good business sense. This is a plot line straight out of George Barr McCutcheon’s famous book Brewster’s Millions! If the CIC spends the money in time, they’ll got a whole lot more.

This perhaps explains the dramatic increase in CIC investments over the past few months. It’s all part of the new story of CIC’s Billions.

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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