CIC to buy 44.7M shares of Morgan Stanley

June 3, 2009 at 6:46 AM
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BEIJING, June 3 (UPI) -- The state-owned China Investment Corp. says it plans to buy 44.7 million of the 80.2 million common shares being sold by Morgan Stanley.

The purchase estimated at $1.2 billion will give the $200 billion Chinese sovereign wealth fund a 9.86 percent ownership in the sixth-largest U.S. bank by assets, China Daily reported.

Morgan Stanley expects to raise $2.2 billion from its public offering in order to fully redeem the preferred capital of the U.S. government's Troubled Asset Relief Program (TARP) before June's end. Morgan Stanley received $10 billion under the $700 billion TARP bailout program.

The China Daily said CIC had purchased $5.6 billion mandatory convertible securities in Morgan Stanley's common stock in December 2007, but its stake was diluted to 7.86 percent after Mitsubishi UFJ Financial Group Inc. bought into the bank in October.

"Morgan Stanley is widely expected to be able to leverage on its strengthened financial position and will be on the road of resuming its successful trajectory amid the dramatic restructuring of the international financial services industry," CIC was quoted as saying.

CIC was set up in 2007 to explore investment opportunities for China's huge foreign exchange reserves estimated at about $2 trillion.

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