Morgan Stanley ( MS) plans to sell its one-third stake in the Beijing-based investment bank, China International Capital, according to a published report. Instead, the New York investment bank is preparing to establish a new securities joint venture on the mainland, and global private-equity firms could be possible buyers, said the report in The Wall Street Journal, which cited people familiar with the matter. The Wall Street bank recently signed a deal to team up with Shanghai-based China Fortune Securities Co., the Journal said. Morgan Stanley, along with China Construction Bank, created the joint venture investment bank in 1995. China Jianyin Investment -- a state-owned investment company that was a byproduct of the demerging of China Construction Bank in 2004 -- owns a 43% stake. Morgan Stanley currently holds a 34.3% stake. The value of the stake could be more than $800 million, representing several times its book value, the Journal said. A sale of the stake would boost Morgan Stanley's capital levels.
The sale would also boost Morgan Stanley's capital. Last month, the firm received a $5 billion cash infusion from China Investment Corp., a Chinese investment group, after reporting $9.4 billion in fourth-quarter writedowns due to its mortgage exposure. The company posted a fourth-quarter loss from continuing operations of $3.59 billion, or $3.61 a share.