China Investment Corp. may up stake in Blackstone

China Investment Corp., the government's sovereign wealth fund, may raise its stake in U.S. investment group Blackstone LP after the two agreed to boost the Chinese company's ownership limit.

CIC had paid $3 billion for a stake in Blackstone's June 2007 initial public offering, but has seen the value of that investment sink in the bear market, to the consternation of many in China.

According to a regulatory filing, a revised agreement reached Thursday between Blackstone and CIC unit Beijing Wonderful Investments Ltd. has raised the limit on the Chinese company's stake to 12.5 percent from 9.99 percent.

The filing with the U.S. Securities and Exchange Commission, posted on Blackstone's Web site, did not require regulatory approval.

There was no official comment from CIC on its plans for additional share purchases. At the time of Blackstone's IPO, its shares were valued at $31 apiece. On Thursday, they rose 1.7 percent to $9.36.

The $200 billion investment arm of the Chinese government was set up to make profitable use of Beijing's foreign reserves, which totaled $1.9 trillion by the end of September.

Most of those funds are kept in U.S. Treasuries and other safe but low-yielding securities. But there has been grumbling about the performance of some of the fund's higher profile investments amid the recent market turmoil.

CIC's biggest investment to date was a $5 billion investment in Morgan Stanley, one of nine major banks now seeking relief from the deepening credit crisis through the U.S. government's $700 billion banking bailout. That purchase will give it a 9.9 percent stake in the investment bank.

The Chinese sovereign wealth fund also invested more than $100 million in Visa Inc.'s $19.1 billion IPO and has invested in a fund managed by J.C. Flowers, a U.S. private equity firm.