Morgan Stanley Given Okay to Exit CICC

Chinese regulators have given Morgan Stanley the green light to sell its stake in China International Capital Corp., Reuters reported. Morgan Stanley has long wanted to sell the 34.3% stake in CICC, Reuters said, adding that private equity firms Kohlberg Kravis Roberts & Co. and TPG Capital are expected to buy the stake for more than $1 billion.

(Reuters) – China International Capital Corp (CICC), the country’s top investment bank, has won regulatory approval for Morgan Stanley to sell its stake in CICC, paving the way for the long-planned divestment.

The China Securities Regulatory Commission (CSRC) said in a statement on its website that it had on Nov. 26 approved CICC’s application for the shareholding change that involved a stake of more than 5 percent in the company.

The regulator did not state the name of the shareholder involved, but in an emailed response to a Reuters query, a CICC spokeswoman said: “In regard to the CSRC’s announcement of ownership changes at CICC, we do not deny that it has to do with Morgan Stanley.”

The spokeswoman declined to give further details, but Morgan Stanley has long said it wanted to sell its 34.3 percent stake in CICC.

Morgan Stanley did not respond to a request for comment.

Private equity firms Kohlberg Kravis Roberts & Co and TPG Capital are expected to buy the stake for more than $1 billion, sources told Reuters in February. [ID:nN22143212]

NEW MORGAN JV

Chinese media reported earlier this month that Morgan Stanley’s application to sell the CICC stake had already been approved by the State Council, the country’s cabinet, with final approval by the CSRC a mere formality. [ID:nTOE6A800E]

Morgan Stanley paid just $37 million for its CICC stake when the Chinese bank was founded more than a decade ago.

Morgan Stanley had made known its intention to form a new joint venture with China Fortune Securities Co as early as 2007.

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.

In a confirmation those plans are going ahead, Shanghai Jinling Co , Shanghai Belling and Shanghai Feilo Acoustics , shareholders of China Fortune Securities, said they had agreed to China Fortune’s plan to invest 680 million yuan ($102.1 million) in the joint venture with Morgan Stanley.

China Fortune will own two-thirds of the joint venture, the companies said in separate filings to the Shanghai Stock Exchange.

The companies said the joint venture plan was subject to regulatory approval. ($1=6.659 Yuan) (Additional reporting by Ruby Lian; Editing by Muralikumar Anantharaman)