CIC Chinese fund buys 12% equity stake in Uralkali CIC has become the second largest shareholder in Russian potash producer Uralkali, the latest in a string of commodity-related investments by the Chinese sovereign wealth fund. Uralkali announced in a statement on Tuesday that CIC had chosen to convert bond holdings it purchased last November into equity, equivalent to a 12.5 per cent equity stake in the London-listed company. Russian oligarch Suleiman Kerimov will remain the largest shareholder, with a 22 per cent stake. CIC is no stranger to Russia, having bought a 5 per cent stake in Polyus Gold in 2012 and taking part in the flotation of the Moscow stock exchange in February this year. The move to invest in potash - which is used primarily to produce fertiliser - is part of CIC's broader move to diversify its investments away from industrial commodities. Between its 2011 and 2012 annual reports, the fund cut its energy and materials-related equity holdings from 23 per cent to 17 per cent of its portfolio. Instead it has looked to the financial sector, which accounts for 22 per cent of its investments, and has said it is seeking to buy more agricultural assets. Uralkali, which produces about 20 per cent of the world's potash, shook up the market this summer when it announced it was to quit the cartel that controlled the chemical. The decision caused a dramatic drop in global potash prices, and upset relations between Russia and neighbouring Belarus, home to the other partner in the former cartel. The move comes as Mr Kerimov, Uralkali's largest single shareholder, is in talks to sell his stake to a list of potential buyers including billionaires Vladimir Evtushenkov and Mikhail Gutseriev and Dmitry Kogan, a former government official close to Rosneft chairman Igor Sechin. The move by CIC will simplify the group's shareholder structure. The offshore holding that issued CIC with its shares was jointly owned by Mr Kerimov and Uralkali's two other billionaire shareholders Anatoly Skurov and Filaret Galchev. The conversion of the bonds would allow Mr Kerimov and perhaps Mr Skurov and Mr Galchev to completely sell out of the company. It remains to be seen whether CIC plans to be a long-term shareholder in the company or whether it would sell its stake as well. Luis Saenz of BCS Financial Group said: "The market capitalisation of Uralkali is now 27 per cent lower than at the time of the deal so the fact that CIC is converting is quite surprising. It could be implying a significant premium to current levels. The move to convert debt to equity is one of CIC's first moves under its new chairman, Ding Xuedong, who took up the post this summer.