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REFILE-UPDATE 1-CIC to avoid defence, casino investments

(Refiles to fix second reference to Jin Liqun’s name throughout)

*CIC official forecasts rapid growth for China PE industry

*CIC sees more room to collaborate with global institutions

HONG KONG, Sept 29 (Reuters) - China Investment Corp, China’s $300 billion sovereign fund, will stay clear of investing in defence, casino and alcohol-related sectors, a senior official told a private equity conference on Wednesday.

“We will not do anything that has a reputational risk for us,” CIC supervisory board Chairman Jin Liqun said in an address at the Super Return Asia 2010 conference.

He said the private equity industry in China was set for strong growth in coming years, helped by a sound legal system and attractive exit opportunities through initial public offerings.

“In the next 5-10 years, China promises to be one of the most exciting PE markets in the world ... PE investments (have) all the ingredients for rapid growth in China,” he said. Jin assured the gathering that CIC is making progress and learning mistakes from the past.

“Sovereign wealth funds such as CIC are working on the basis on very high corporate governance,” he said.

He said the general perception about Chinese state owned enterprises was that they are inefficient and loss-making. “But when CIC comes to invest in your country, we are ferociously competitive and efficient,” he added.

CIC has backed some of China’s SOEs’ overseas M&A drives over the years. Many such state-backed takeovers have attracted protests from foreign governments and nationalistic quarters in the target countries.

Jin declined to comment about whether CIC will play any role in Sinochem's likely counterbid for Potash Corp POT.TO in an effort to foil BHP Billiton's $39.6 billion hostile takeover offer for the Canadian fertilizer company.

But Jin said CIC will work closely with global institutions to tap opportunities.

“We expect to expand collaboration in the future as we see many projects that are win-win opportunities,” added without saying what those opportunities might be.

Jin said the Chinese government has encouraged cross-border acquisitions after the financial crisis and also has encouraged greater private participation.

“This is an important step in breaking down state monopoly in some sectors zealously guarded by the SOEs,” he added.

Reporting by Denny Thomas; Editing by Ken Wills