Morgan Stanley is selling its 34.3% stake in China International Capital Corp. to sovereign wealth fund Government of Singapore Investment Corp. as well as Kohlberg Kravis Roberts, TPG Capital and Singapore-based insurer Great Eastern Holdings, four people with direct knowledge of the deal said.
Morgan Stanley plans to sell stakes of about 10% each to TPG and KKR, about a 5% stake to Great Eastern, and the rest to Singapore GIC, said the people, who declined to be identified because the matter isn't public. The 34.3% stake is valued around $1 billion, two of the people said.
The sale would open the way for Morgan Stanley to find a new local partner or build its own investment bank in China after being a shareholder in Beijing-based CIC without having management control.
Great Eastern was originally in discussions with CIC to buy Morgan Stanley's entire stake, but the plan was blocked by Chinese regulators, said one of the people.
Morgan Stanley invested $35 million in CIC when it was established in 1995. It ceded management control in 2000 and CIC is now run by Levin Zhu, the son of former Chinese Premier Zhu Rongji. Singapore's GIC, which manages more than US$100 billion in assets, also bought CIC shares in 1995 and has been one of the founding shareholders, according to CIC's website.
Mark Lake, a Morgan Stanley spokesman, declined to comment. TPG spokesman Owen Blicksilver and Kristi Huller of KKR declined to comment. Great Eastern spokeswoman Tan Seck Geok didn't return telephone messages left outside of normal business hours in Singapore and an e-mail seeking comment wasn't immediately answered.
The China Securities Regulatory Commission said in a statement Monday on its website that it approved CIC's application for a shareholding change involving a more than 5% stake, without elaborating.