Bain, General Atlantic Eye Morgan Stanley Stake in CICC

HONG KONG (Reuters) – Private equity firms Bain Capital and General Atlantic are among those eyeing Morgan Stanley’s (MS.N) stake in China International Capital Corp (CICC), the country’s largest investment bank, in a deal that could fetch more than $1.2 billion.

Morgan Stanley paid just $37 million for its piece of CICC when the Chinese bank was founded 13 years ago.

CICC is one of the most profitable investment banks in China. In March 2008, Morgan Stanley failed to sell the stake due to price and disagreements with regulators, unnamed sources close to the deal told Reuters at the time. It reportedly sought more than $1 billion.

A source with direct knowledge of the matter said on Tuesday that the current asking price for the 34.3 percent stake is between $1.2 billion and $1.5 billion.

The source, along with other people with direct knowledge of the matter, said first-round bids for Morgan Stanley’s stake are due on Tuesday. The sources were not authorised to speak publicly about the deal.

A re-launch of Morgan Stanley’s sale of its holding in the Chinese bank has been widely expected, marking at least the second time since last year that the Wall Street bank has tried to sell it.

Other private equity firms such as TPG Capital and J.C. Flowers have previously expressed interest in the stake, the source told Reuters on Tuesday.

In December 2007, Morgan Stanley signed an agreement with China Fortune Securities, in an effort to attain a Chinese joint venture that gave the New York bank more control over management decisions.

Beijing bars foreign firms from having more than one investment banking venture and limits their holdings to one-third. Morgan Stanley’s ability to move ahead with the China Fortune deal has been held up by its failure so far to sell the CICC stake.

Morgan Stanley declined to comment. Bain, General Atlantic and CICC were not immediately available for comment.

(Reporting by Michael Flaherty and George Chen; Editing by Simon Jessop and Erica Billingham)