China Investment Corporation, the Chinese sovereign wealth fund, is in talks with U.S. private equity group JC Flowers to put about $4 billion into a new fund to invest in ailing financial firms, the Financial Times said.

China will be investing indirectly into the fund in a bid to avoid political a backlash against sovereign wealth funds investing in well-known foreign firms, the paper reported on Friday, quoting people familiar with the matter.

The new JC Flowers fund is also more likely to invest in smaller banks and brokerages, which have not been the customary targets of sovereign funds, it said.

JC Flowers was not immediately available to comment.

(Additional reporting by Ritsuko Ando in New York)

(Reporting by Miyoung Kim; Editing by David Cowell)