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Morgan Stanley reaps windfall
Fri, Dec 03, 2010
Reuters
MORGAN Stanley has finally got Beijing's approval to sell its 34 per cent stake in CICC, China's top investment bank - but it comes with a twist.
KKR and TPG, the two United States private-equity houses that have bid for the stake, now have to share it with two other parties.
That gives them less influence than their predecessor had - just when CICC's growth is getting riskier.
CICC has brought Morgan Stanley plenty of frustration.
The Wall Street firm was sidelined in big strategic decisions, and took two years to find an acceptable buyer.
Yet because CICC's domestic underwriting business grew rapidly, the returns have been large, and Morgan Stanley should raise over US$1 billion (S$1.3 billion) for a stake that cost US$37 million in 1995.
Meanwhile, the new owners will face a different problem.
CICC is now losing market share in its home market. It was ranked just fifth in domestic initial public offerings during the first half of this year, before Agricultural Bank of China sprung it back up to the top spot.
Expansion has proved costly, and a tripling in CICC's headcount has coincided with some high-level departures.
KKR and TPG will still get access to CICC's scarcity value and new overseas growth.
Chinese investment banks are now a fixture on global league tables, and CICC - which has helped handle GM and AIA's IPOs - is well-placed to advise on outbound deals.
Two challenges lie ahead.
One is a lack of influence.
According to people close to the matter, KKR and TPG will get little more than 10 per cent of CICC each, leaving the rest of Morgan Stanley's stake to Singapore's GIC and another investor, while state-owned investment fund Huijin has 43 per cent - sending a clear message that the newcomers are mere passengers.
The other challenge, which may seem far away now, is how to exit.
A smaller stake may be easier to sell in future than Morgan Stanley's 34 per cent stake.
But just as for their long-suffering predecessor, when the moment of exit comes, it probably will not be KKR and TPG that decide the terms.
=======================================
GIC, Great Eastern 'to buy stakes in CICC'
05:55 AM Dec 03, 2010
SINGAPORE - The Government of Singapore Investment Corp (GIC) and life insurer Great Eastern are planning to buy stakes of about 10 per cent and 5 per cent, respectively, in China International Capital Corp (CIIC) from United States investment bank Morgan Stanley, four people with direct knowledge of the deal told Bloomberg.
Morgan Stanley is selling its entire 34.3-per-cent stake in CICC, valued at roughly US$1 billion ($1.31 billion), in a move that will end its 15-year involvement in the lender, the first Sino-foreign investment bank and the top-ranked underwriter of share sales in China.
Besides GIC and Great Eastern, Morgan Stanley plans to sell stakes of about 10 per cent each to US private equity firms Kohlberg Kravis Roberts and TPG Capital, said the sources.
GIC already owns 7.35 per cent of CICC after buying into the company in 1995. Great Eastern was originally in discussions with CICC to buy Morgan Stanley's entire stake but the plan was blocked by Chinese regulators, said one of the sources.
CICC is 43.35-per-cent owned by Central Huijin Investment - the investment arm of the nation's sovereign fund China Investment Corp. The other shareholders besides GIC are Mingly Corp, with 7.35 per cent, and China National Investment & Guaranty, with 7.65 per cent.
CICC is headed by Mr Levin Zhu, son of former Chinese Premier Zhu Rongji. Bloomberg
Fri, Dec 03, 2010
Reuters
MORGAN Stanley has finally got Beijing's approval to sell its 34 per cent stake in CICC, China's top investment bank - but it comes with a twist.
KKR and TPG, the two United States private-equity houses that have bid for the stake, now have to share it with two other parties.
That gives them less influence than their predecessor had - just when CICC's growth is getting riskier.
CICC has brought Morgan Stanley plenty of frustration.
The Wall Street firm was sidelined in big strategic decisions, and took two years to find an acceptable buyer.
Yet because CICC's domestic underwriting business grew rapidly, the returns have been large, and Morgan Stanley should raise over US$1 billion (S$1.3 billion) for a stake that cost US$37 million in 1995.
Meanwhile, the new owners will face a different problem.
CICC is now losing market share in its home market. It was ranked just fifth in domestic initial public offerings during the first half of this year, before Agricultural Bank of China sprung it back up to the top spot.
Expansion has proved costly, and a tripling in CICC's headcount has coincided with some high-level departures.
KKR and TPG will still get access to CICC's scarcity value and new overseas growth.
Chinese investment banks are now a fixture on global league tables, and CICC - which has helped handle GM and AIA's IPOs - is well-placed to advise on outbound deals.
Two challenges lie ahead.
One is a lack of influence.
According to people close to the matter, KKR and TPG will get little more than 10 per cent of CICC each, leaving the rest of Morgan Stanley's stake to Singapore's GIC and another investor, while state-owned investment fund Huijin has 43 per cent - sending a clear message that the newcomers are mere passengers.
The other challenge, which may seem far away now, is how to exit.
A smaller stake may be easier to sell in future than Morgan Stanley's 34 per cent stake.
But just as for their long-suffering predecessor, when the moment of exit comes, it probably will not be KKR and TPG that decide the terms.
=======================================
GIC, Great Eastern 'to buy stakes in CICC'
05:55 AM Dec 03, 2010
SINGAPORE - The Government of Singapore Investment Corp (GIC) and life insurer Great Eastern are planning to buy stakes of about 10 per cent and 5 per cent, respectively, in China International Capital Corp (CIIC) from United States investment bank Morgan Stanley, four people with direct knowledge of the deal told Bloomberg.
Morgan Stanley is selling its entire 34.3-per-cent stake in CICC, valued at roughly US$1 billion ($1.31 billion), in a move that will end its 15-year involvement in the lender, the first Sino-foreign investment bank and the top-ranked underwriter of share sales in China.
Besides GIC and Great Eastern, Morgan Stanley plans to sell stakes of about 10 per cent each to US private equity firms Kohlberg Kravis Roberts and TPG Capital, said the sources.
GIC already owns 7.35 per cent of CICC after buying into the company in 1995. Great Eastern was originally in discussions with CICC to buy Morgan Stanley's entire stake but the plan was blocked by Chinese regulators, said one of the sources.
CICC is 43.35-per-cent owned by Central Huijin Investment - the investment arm of the nation's sovereign fund China Investment Corp. The other shareholders besides GIC are Mingly Corp, with 7.35 per cent, and China National Investment & Guaranty, with 7.65 per cent.
CICC is headed by Mr Levin Zhu, son of former Chinese Premier Zhu Rongji. Bloomberg
In a fascist society, individuals are nothing more than cogs in the machine. Ask not what the country can do for you but what you can do for the country. If country needs you to relinquish 2 years of your lifetime to serve it, you bloody hell do it. Suck thumb. If country needs you to stfu, you better be quiet. Suck thumb. Of course, by "country",what the ruling class really meant to say was "us".
