Morgan Stanley Nears CICC Sale With Approval by China Regulator

Morgan Stanley moved closer to selling its stake in China International Capital Corp., ending a 15-year relationship with the first Sino-foreign investment bank and freeing the Wall Street firm up to find a new local partner.

The China Securities Regulatory Commission said in a statement on its website that it approved CICC’s application for a shareholding change involving a more than 5 percent stake. The official China Securities Journal said the change “very likely” involved Morgan Stanley’s proposed sale of its 34.3 percent holding in CICC.

“We wouldn’t deny the media report saying this approval is related to Morgan Stanley,” said Yang Guang, a spokesman for Beijing-based CICC, in an interview. Morgan Stanley spokesman Nick Footitt declined to comment.

KKR & Co. and TPG Inc. are in final talks to buy Morgan Stanley’s stake in CICC for more than $1 billion, people with knowledge of the matter said in February. Morgan Stanley Chairman John Mack said the same month that the firm is selling its Chinese venture because the country’s government won’t allow it to take majority control.

Feilo Acoustics Co., which owns a 24 percent stake in China Fortune Securities Co., said today in a statement it approved plans by the Chinese brokerage to set up a venture with Morgan Stanley. Fortune Securities will invest 680 million yuan ($96 million) to take a two-thirds stake in the venture, according to the release.

Goldman Sachs Group Inc., UBS AG and Credit Suisse Group AG are among foreign investment banks that have underwriting ventures in China, the world’s biggest market for initial public offerings. Royal Bank of Scotland Group Plc got regulatory approval for a venture with Guolian Securities Co., according to a CSRC statement dated Nov. 9.

--Eva Woo. Editor: Philip Lagerkranser

To contact the reporter on this story: Eva Woo in Beijing at ewoo9@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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