KKR and TPG Lead Syndicate in CICC Purchase

Just days after Chinese regulators approved Morgan Stanley’s divestment from China International Capital Corp., a syndicate of investors, led by private equity firms Kohlberg Kravis Roberts & Co. and TPG Capital, have stepped up with an offer, Reuters reported. The two U.S. buyout shops, as well as the Government of Singapore Investment Corp. and the insurance arm of Oversea-Chinese Banking Corp., have teamed up to buy the 34.3% stake. Morgan Stanley is expected to get more than $1 billion for the stake, which it received for just $37 million more than a decade ago, Reuters said.

(Reuters) – Singapore’s GIC and OCBC’s (OCBC.SI) insurance arm have joined a group led by U.S. private equity firms KKR [KKR.UL] and TPG Capital [TPG.UL] in buying Morgan Stanley’s (MS.N) 34.3 percent stake in top Chinese investment bank CICC.

Late on Wednesday, Reuters Breakingviews reported that Government of Singapore Investment Corp (GIC) [GIC.UL], Singapore’s sovereign wealth fund, had joined the bid by Kohlberg Kravis Roberts & Co (KKR) and TPG for Morgan Stanley’s stake. [ID:nLDE6B00I4]

Separately, a source familiar with the matter told Reuters that Great Eastern Holdings Ltd (GELA.SI), the insurance company controlled by Oversea-Chinese Banking Corp (OCBC), had also joined the group.

The long-awaited deal was expected to be announced before the end of the year, the source said, adding that most regulatory approvals had been obtained and only some minor ones were pending.

Morgan Stanley is expected to get more than $1 billion for the stake, which it received for just $37 million when the venture was founded more than a decade ago. It was not clear how the stake will be divided between the four partners.

The source declined to be identified as the deal was not public yet. Morgan Stanley was not available for an immediate comment. GIC and Great Eastern were also not available for comment.

Morgan Stanley has been trying to sell its stake in China International Capital Corp (CICC) for several years, and indicated as early as 2007 its intent to form a new investment banking joint venture with China Fortune Securities.

However, since China’s securities rules forbid foreign companies from having more than one joint venture at a time in the country, it had to put those plans on hold pending the sale of its CICC stake.

China’s securities regulator has since started vetting Morgan Stanley’s (MS.N) application for its new venture with China Fortune, after the CICC stake sale was approved, the 21st Century Business Herald reported on Thursday, citing unidentified sources.

By Doug Young and Megan Davies
(Additional reporting by Samuel Shen; Editing by Chris Lewis)