China fund invests $5B in Morgan Stanley

Dec. 19, 2007 at 9:47 AM
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NEW YORK, Dec. 19 (UPI) -- Morgan Stanley said Wednesday China's government-controlled investment fund had invested $5 billion to help replenish the No. 2 U.S. brokerage firm's capital.

The announcement came as the investment bank reported a fourth-quarter loss of $3.59 billion, or $3.61 a share, compared with a year-earlier profit of $1.54 billion, or $1.44 a share.

The loss was due to a $9.4 billion write-down from its exposure to subprime and other mortgage-related investments, the company said.

China Investment Corp., which has some $200 billion in assets, will buy up to a 9.9 percent stake in the company through equity units that covert into common stock, Morgan Stanley said.

Its investment will yield 9 percent a year before the equity units are converted into common shares Aug. 17, 2010, the company said.

The fund will have no special rights of ownership or any role in Morgan Stanley management, the company said.

The investment is the latest in a growing number of foreign sovereign-wealth funds investing in U.S. financial-services companies.

Last month, Abu Dhabi's fund invested $7.5 billion in Citigroup Inc. and an investment arm of Singapore's government has put $9.72 billion into big Swiss bank UBS AG.

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