CIC to buy Morgan Stanley stake for $5bn
20 December 2007
China Investment Corp will buy up to a 9.9% stake in US investment bank Morgan Stanley for US$5 billion, the Wall Street Journal reported. The Chinese sovereign wealth fund will buy equity units that convert into common stock, and will be a passive investor with no management role. The CIC transaction came during an announcement that Morgan Stanley had a fourth-quarter net loss of US$3.59 billion and US$9.4 billion in write-downs. John Mack, Morgan Stanley's chief executive, said he would give up his bonus for the year because of the poor results. CIC has a US$3 billion stake in Blackstone Group. China's largest listed brokerage, CITIC Securities, has a US$1 billion investment in Bear Stearns. Other sovereign funds have bought international financial firms that are struggling to raise capital during a credit crunch. Abu Dhabi's fund paid US$7.5 billion for a 4.9% stake in Citigroup and Singapore's Government Investment Corporation invested US$9.72 billion in a 9% stake in Swiss bank UBS.
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