* China seeking supply chain assets around the world
* Asciano offers port, rail assets in Australia
* CIC part of Qube-led $6.4 bln bid
* China made record infrastructure investments in 2015
By Swati Pandey and Brenda Goh
SYDNEY/SHANGHAI, March 1 (Reuters) - President Xi Jinping's
ambitious One Belt, One Road initiative is coming Down Under as
China's hunger to secure global supply chains leads its giant
sovereign wealth fund into the $6.4 billion battle for
Australia's Asciano Ltd AIO.AX .
Australia, already a major supplier of commodities to China,
is set to boost exports under a free trade deal signed last
year. Asciano, the country's largest ports and rail operator,
fits with Beijing's ambition to expand transportation linkages
across a region it sees key to its economic growth.
"This is part of a process where China does want to control
its logistics chains," said Harry Theochari, London-based global
head of transport at law firm Norton Rose Fulbright.
"If you are a big emerging nation that's very heavily
reliant on raw materials from other countries ... you'd want to
have as much control over the transporting of those fundamental
raw materials as you possibly can."
China Investment Corp (CIC) CIC.UL , the country's $747
billion sovereign wealth fund, is part of a consortium headed by
cargo handler Qube Holdings Ltd QUB.AX offering A$9 billion
($6.4 billion) for Asciano. Under the deal, which has been
recommended by Asciano's board, CIC would take a stake in both
Asciano's ports and rail operations.
A potential alternative proposal being discussed involving
Qube teaming up with rival Canadian bidder Brookfield Asset
Management Inc BAMa.TO would leave CIC owning the railways,
but not the ports, which Australia views as strategic assets
that should remain in local hands.
A spokeswoman said CIC was working on its bid with the Qube
consortium and declined to comment further.
CHINA DEALS
Beijing, through the country's firms, has been snapping up
assets as part of the One Belt One Road project launched in
2013, undertaking a record 19 global infrastructure deals worth
$6.8 billion in 2015, according to Thomson Reuters data.
The initiative envisions building a network of land, sea and
air routes that will open new trade links and markets for
Chinese firms as the domestic economy slows.
CIC, one of the sponsors of the $40 billion Silk Road Fund,
has been active, but other Chinese companies are also involved.
CIC holds a 10 percent stake in London's Heathrow Airport
and a 9 percent stake in the company behind the UK's largest
water and sewage company. In the United States, CIC's
investments include a 17 percent stake in power company AES.
China Merchants Holdings 0144.HK owns stakes in the ports
of Morocco, Djibouti and France while Cosco Pacific has
interests in terminals at the Suez Canal and Belgium's Antwerp.
"I think it is quite a smart move by them and it plays into
the One Belt, One Road project because it means they are not
just recreating the Silk Route but also owning the Silk Route,"
said a Sydney-based M&A lawyer who advises on investments by
Chinese companies into Australia.
POLITICAL SENSITIVITIES
The China Australia Free Trade Agreement is set to help
boost investment, with in-bound private Chinese proposals below
A$1.08 billion no longer requiring Foreign Investment Review
Board (FIRB) approval.
But political sensitivities remain around investments in
areas such as agriculture and ports.
The sale of Darwin Port, used by a deployment of U.S.
Marines as well as the terminus for a critical underwater data
cable, to China's Landbridge Group, sparked a rebuke from
Washington last year.
People familiar with the Asciano deal say the new proposal
is being designed to alleviate some of those regulatory concerns
as the critical port assets would remain with the Australian and
Canadian companies.
M&A lawyers and bankers said Chinese state-owned funds and
enterprises are also buying access to best practices via deals
like the Asciano bid.
They are keen on engineering and infrastructure deals to
replicate technology and know how back in China, ANZ Bank said
in a December report titled 'What else is China buying in
Australia?'
"I think we'll see them doing lots of investments into
freight infrastructure, into agriculture," said the Sydney-based
M&A lawyer, who declined to be identified because she was not
authorised to talk to the media. "Also, I wouldn't be surprised
if they start moving into healthcare, if they're not already and
then technology. All of that is going to be of assistance to
them in the building of their economy."
($1 = 1.3826 Australian dollars)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
China's Silk Road http://reut.rs/1kuH3n4
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>