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Friday, July 3, 2009 9:46 AM

How a Chinese fund met Teck

Andrew Willis

Call him our man in China.

In his latest incarnation, Felix Chee is special advisor to the head of Investments at China Investment Corporation, or CIC. The $200-billion (U.S.) fund is one of the largest sovereign wealth players on the planet.

Before he moved to Beijing, Mr. Chee was a familiar face in Canadian investment circles. He’s the former chief investment officer at Manulife Financial and head of the Ontario Hydro pension plan and University of Toronto Asset Management.

It’s that Manulife role that is critical to what played out Friday, when CIC bought the biggest private placement ever seen in Canadian capital markets by purchasing $1.7-billion of shares in base metal miner Teck Resources TCK-T.

Mr. Chee got this process started several months back by calling up Scotia Capital vice-chairman John Sherrington. He was reaching out to the investment banker who oversaw the $2.5-billion Manulife IPO, the largest debut ever seen from a domestic company.

Mr. Sherrington is now global head of private equity at Scotia Capital, after running the dealer’s financial institutions group for years. That first call opened the door to talks with Teck that gave CIC a major director ownership of a commodity play.

Scotia Capital and just about every other investment bank on the planet have been pitching debt-heavy Teck with refiancing plans. But many involved either a loss of control for the controlling shareholders, including chairman Norm Keevil, or sale of premium mining properties in South America at a time when base metal prices are in the tank. CIC is buying 101 million subordinated voting shares at a thin 7 per cent discount to Teck's closing price on Thursday.

“As the first major investment by CIC in a Canadian company, this is a landmark transaction in the Canadian capital market,” said Mr. Sherrington on Friday. Scotia Capital was the only financial advisor to CIC on this transaction.

Teck, obviously, is thrilled with the way this worked on.

"This transaction will have an immediate and very positive effect on Teck's balance sheet," said CEO Don Lindsay in a press release. He added that the CIC investment "represents an attractive opportunity for Teck to establish a relationship with a major Chinese financial investor, with a deep understanding of China, the world's largest consumer of our principal products."

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Streetwise Contributors

Andrew Willis

Andrew Willis joined The Globe and Mail in September of 1995. His career has included stints at a number of publications, including The Financial Post, The Financial Times of Canada, Dow Jones/Wall Street Journal, and MacLean's magazine. He also did freelance writing for Investment Executive magazine. He appears on television for BNN TV and CBC Newsworld.

Andrew has co-written a book, The Bre-X Fraud, with business journalist Douglas Goold.

Read Streetwise Tuesday through Friday in the pages of Report on Business.

 
Boyd Erman

Boyd Erman

Boyd Erman is a long-time business journalist who has worked at Dow Jones, Bloomberg, and the National Post before joining the Globe and Mail. Over the years, his areas of coverage have included economics, monetary policy, debt markets and corporate finance.

In addition, he is a regular commentator and guest host on Business News Network.

 

Steve Ladurantaye

Steve Ladurantaye wrote about technology companies in Ottawa before reporting for the Peterborough Examiner and Kingston Whig-Standard, where he won a National Newspaper Award for explanatory journalism. After joining the Globe and Mail in 2007, his work has regularly appeared in Report On Business and Globe Investor Magazine.

 
Globe and Mail reporter Tara Perkins

Tara Perkins

Tara Perkins has been a business reporter since 2004, following a brief stint as overnight editor of globeandmail.com. She has been writing for the Globe's business section since the spring of 2007, covering the banking sector during the course of the financial crisis. Prior to that, she worked for the Toronto Star. Tara has a Bachelor of Journalism from Ryerson University and a Bachelor of Commerce from the University of Guelph.

 
 

Jacquie McNish

Jacquie McNish has been a business writer with The Globe and Mail since 1988. Prior to that she was a reporter with The Wall Street Journal.

During her time at The Globe and Mail, she has served as the paper's New York correspondent and won three National Newspaper Awards. She is the author of The Big Score: Robert Friedland and The Voisey's Bay Hustle and Wrong Way: The Fall of Conrad Black, for which she and co-author Sinclair Stewart won the National Business Book Award. She is a co-host of Market Morning on the Business News Network.