China Investment Corp. to buy $5 billion equity units in Morgan Stanley

Source: Exec Digital USA

Date :12/19/2007 4:14:50 AM

Chinese sovereign wealth fund China Investment Corp Ltd is to buy $5 billion in equity units in Morgan Stanley - convertible to stock in the brokerage.

The Chinese fund, will end up with 9.9 percent or less of Morgan Stanley's total outstanding shares, and will be a passive financial investor, the brokerage said on Wednesday.

The investment came as the brokerage announced higher-than-expected writedowns of $9.4 billion on subprime and other mortgage related debt.

China launched the $200 billion sovereign wealth fund- one of the world's richest - in September with a focus on financial products in overseas markets. The fund - headed by former vice finance minister Lou Jiwei - has a $3 billion stake in U.S. private equity house Blackstone Group.

Fourth-quarter writedown

Morgan Stanley also reported a larger-than-expected fiscal fourth-quarter loss due to a $9.4-billion writedown from its exposure to subprime and other mortgage-related investments.

The investment bank said it lost $3.61 billion or $3.61 per share in the fourth quarter, compared with a profit of $2.27 billion, or $1.44 per share, a year earlier.

It also reported negative net revenue of $450 million resulting from the writedowns, compared to revenue of $7.75 billion a year ago.

December 19, 2007