KKR, TPG in Talks To Buy CIC Corp. Stake From Morgan Stanley

(Reuters) – Morgan Stanley is in late stage talks to sell its stake in China International Capital Corp to Kohlberg Kravis Roberts & Co and TPG Capital for more than $1 billion, according to three sources familiar with the situation.

Morgan Stanley has been exploring a sale of its 34.3 percent stake in CICC, one of China’s leading investment banks. The bank paid just $37 million for its piece of CICC when the Chinese bank was founded 13 years ago. A sale would allow the New York bank to pursue other joint ventures.

Morgan Stanley, TPG, and KKR declined to comment. CICC could not be reached for comment.

The proposed deal would divide Morgan Stanley’s stake in CICC between KKR and TPG. The deal would require Chinese government approval.

The Wall Street Journal first reported the escalation of talks on Monday.

The newspaper reported that KKR’s Henry Kravis and TPG’s David Bonderman, both founding partners of their firms, are likely to sit on CICC’s expanded board.

Reuters reported earlier this month, based on sources, that KKR, TPG and Bain Capital were on the short list to submit final bids for Morgan Stanley’s stake in CICC. One source told Reuters the deal could be worth up to $1.5 billion.