Morgan Stanley sells shareholdings in CICC
30 December 2010
By Chrysant Liu
Morgan Stanley has secured approval from the Chinese regulator to sell its 34.5% shares in China International Capital Corp. (CICC) to Kohlberg Kravis Roberts & Co.(KKR), TPG Capital, Government of Singapore Investment Corp. (GIC), and Great Eastern Holdings Ltd.
Morgan Stanley plans to sell stakes of about 10% each to TPG and KKR, and about a 5% stake to Great Eastern while GIC will buy the remainder. The 34.3% stake is valued at about US$1 billion. In a statement, Morgan Stanley said that it will realise a pre-tax gain of US$700 million following the sale of its holdings.
The disposal will end Morgan Stanley’s 15-year involvement in CICC, the first joint venture investment bank in China. Early in 2007, Morgan Stanley has been indicating its intent to form a new investment banking joint venture with China Fortune Securities. But China’s securities rules forbid foreign companies from having more than one joint venture at a time in the country, forcing the US firm had to put those plans on hold pending the sale of its CICC stake.
CICC was founded by Morgan Stanley and China Construction Bank, together with other Chinese and international financial institutions and corporations in 1995. The bank is 43.35% owned by Central Huijin Investment Ltd., the investment arm of China Investment Corp (CIC), the nation’s US$300 billion sovereign fund, according to CICC’s website. GIC and Mingly Corp. each own 7.35% while China National Investment & Guaranty Co. has 7.65%.