A Chinese investor that has attracted scrutiny in Europe is coming to Wall Street.
CEFC China and the Manhattan boutique investment bank Cowen Group announced yesterday that CEFC was taking a 20% stake in the brokerage, along with three board seats, for $100 million. The Chinese energy and finance company also said it would extend Cowen (COWN) a loan.
On the surface, it looks like just another little-known Chinese company moving money overseas. Last year, Chinese foreign investment in the U.S. more than tripled to $45.6 billion, according to Rhodium, as investors like HNA Group and Anbang Insurance became known in business circles.
But CEFC is different. It is both larger, more powerful, and likely closer to the government than most Chinese investors. In the latest Fortune Global 500 list, it ranked No. 229 with $42 billion in sales from big businesses in oil and finance—industries that the government closely oversees in China.
The company has worked closely with the central government to secure oil abroad. It also hosts high-profile meetings between Chinese People’s Liberation Army officials and retired U.S. generals.
Fortune profiled CEFC’s 39-year-old founder Ye Jianming this summer. In an interview, Ye was open about aligning with the government. “We closely follow the national strategies. So we’ll map out our corporate strategy according to the national ones,” he said. It was good for business.
That alignment has drawn some scrutiny as CEFC’s goes abroad. After the firm invested in several Czech companies a year and a half ago, the local press focused on CEFC and Ye’s ties to China’s propaganda efforts in Taiwan. Ye has denied his involvement.
But the attention CEFC has received increases the chances that U.S. regulators will probe CEFC over its recent investment. Cowen’s chairman Peter Cohen told the New York Times yesterday he didn’t expect it would draw attention because financial services aren’t as sensitive to national security concerns as information technology or defense.
Still, CEFC could soon join other Chinese investors this year with questionable ties to the government who have received extra attention from U.S. officials.
