New Chinese investment firm raises $6 billion in financing

Russia-based Novatek’s (ticker: NVTK) Yamal LNG project has received a new infusion of capital from a new Chinese investment firm called China Insurance Investment Ltd. The firm is comprised of 46 Chinese companies who have raised 40 billion yuan ($6 billion) to finance energy and infrastructure projects overseas, reports Reuters.

The firm is headquartered in the Shanghai free trade zone, and is made up of 27 insurance companies, 15 insurance asset management companies and four private companies. Each shareholder will have a stake of less than 4%.

The 16.5 million ton per annum Yamal LNG project is scheduled to start liquefaction in 2017, but has faced several hurdles in finalizing project financing. Novatek invested roughly $10 billion into the project, which is expected to cost about $27 billion, but has been cut off from additional Western investment by sanctions in place against Russia for its involvement in Crimea.

Sanctions have forced Russian companies to seek financing in China, but this presents its own obstacles. “Chinese money is expensive,” Russian banking sources commented in October regarding finding new sources of financing for Yamal LNG.

Russia, LNG, Yamal LNG

Source: Novatek

Novatek has a 50.1% stake in what will be only Russia’s second LNG plant. France’s Total and China’s CNPC hold 20% each. In September, Novatek agreed to sell a 9.9% stake to the China Silk Road Fund for €700 million ($753 million).

A number of loans have also been extended to Novatek by Russia’s state development bank VEB, Sberbank and Gazprombank.

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