Does the Chinese government really want to own Liverpool?

Deal would be latest case of Beijing flexing its financial muscles abroad

On paper, it looks like a match made in football heaven: take Red China, with huge cash resources to invest overseas, add a dash of passion for English Premier League football in the world's most populated country, and form a union with Liverpool FC, aka the Reds, one of England's most successful football clubs but urgently in need of a financial bailout.

For those among the club's supporters who awoke yesterday to headlines that China was about to buy Liverpool – or, to be more specific, that China's largest sovereign wealth fund, the China Investment Corporation (CIC), was about to finance a takeover of the club – it seemed the marriage was on. And then it got complicated.

The CIC has assets of $332bn (£209bn) invested in projects around the world, from $5bn (£3.15bn) invested in Morgan Stanley to $3bn (£1.9bn) in the global asset-management group Blackstone to $100m (£63m) in the payments firm Visa.

Liverpool have been owned since February 2007 by two Americans, Tom Hicks and George Gillett, who have recently found themselves in financial dire straits. The club, which owes the Royal Bank of Scotland (RBS) £237m and owes Hicks and Gillett £144m, desperately needs to find new owners.

Repayment to RBS is now a matter of urgency or the bank could foreclose. Hicks and Gillett have agreed to sell, and Liverpool's board is sifting through applicant bidders.

Which is where the CIC may enter the picture. One of Liverpool's potential owners is a Chinese entrepreneur called Jian-hua "Kenny" Huang, a 46-year-old former Wall Street trader who now dabbles in sports investment. He confirmed on Wednesday that he was interested in Liverpool but had yet to table a formal bid. And then word leaked out that his wealthy backer was actually the CIC, or so it was claimed.

It is easy to see why Liverpool could be a prize catch for a rich owner. The Premier League is the world's most popular domestic sports competition, screened live in more than 200 countries – and Liverpool is one of its most prized assets.

Liverpool have won 18 English leagues titles in its history, a tally that only Manchester United can match. They have been European Cup winners five times, and have a global following of millions.

They have recently signed a four-year £20m-per-season shirt sponsorship deal with Standard Chartered, a firm that does a lot of business in Asia. And if only they could find an owner to bankroll a new £400m, 60,000-seat stadium, they would stand a realistic chance of reviving their glorious domination of the 1970s and 1980s, on and off the pitch.

Now for the hitch. Mr Huang was rumoured yesterday to be preparing to deny any link to the CIC. In fact, he even drafted a statement to that effect, which he sent to media contacts within China.

The Independent obtained a copy and it contains the line: "Mr Huang would like to deny that there is any involvement of Mainland China state-owned enterprises in his business dealings."

But the statement has yet to be officially released, and Mr Huang's nominated spokespeople – the Hong Kong branch of the international PR firm Hill & Knowlton – are maintaining a consistent "No comment".

A spokesman for the CIC then went further, telling The Financial Times that the CIC "had never heard of a plan to buy Liverpool, or of Kenneth Huang".

It remains theoretically possible that Mr Huang and the CIC are engaged in some convoluted exercise in belated secrecy, although sources in Beijing insisted to The Independent yesterday that the CIC would "never dare contemplate such a risky investment" as Liverpool. The CIC is driven by profit and football is notoriously unprofitable.

So who else might be backing Mr Huang, and what are his credentials? Claims that he owns a share in a prominent American NBA basketball franchise are untrue. He does own a Chinese basketball team, however, and a small Hong Kong-based company, QSL, which has promotional rights to fledgling baseball and basketball competitions in China.

Huang also has some verifiably good connections within sport, having acted as a sponsorship broker for US sports teams and Chinese companies.

But whether he has the Community Party Politburo behind him, or some lesser funder instead, remains for now largely Chinese whispers.