Morgan Stanley (MS) is pursuing a buyer to sell its 34% stake that it holds in investment bank China International Capital Corporation (CICC).
Morgan Stanley’s role in CICC has been reduced to that of a passive investor, prompting the case for disinvestment. Morgan Stanley received approval from Chinese regulators early last year to sell its stake in CICC. However, it then did not opt for the disinvestment as the bids were very low at that time. As the markets have now bounced back, the company now wants to revisit the deal.
Potential suitors for the divestiture in China’s largest investment bank could be private equity firms, namely Bain Capital and General Atlantic. The first rounds for the bids are expected on Tuesday. The divestiture is expected to realize over $1.2 billion for Morgan Stanley.
On Oct. 21, Morgan Stanley reported third-quarter 2009 income of $498 million or 38 cents per share, compared with a loss of $159 million or $1.37 per share in the prior quarter and an income of $7.7 billion, or $7.38 per share a year ago. The results were much ahead of the Zacks Consensus Estimate of 30 cents per share.
The results marked the first quarter of income in a year’s time. Results were aided by robust underwriting revenues in the investment banking operation resulting from higher levels of market activity, strong growth in fixed income sales and trading, commodities, prime brokerage and wealth management business, which offset losses in commercial real estate.
Read the full analyst report on “MS”
Zacks Investment Research
