Morgan Stanley Raises Stakes in China Broker, Fund Ventures

Morgan Stanley moved closer to take full control of its securities and fund management ventures in China as it ramped up investments in the world’s second-largest economy.

The U.S. bank is buying an additional 39% of the securities joint venture for 569.6 million yuan ($89.5 million), according to an exchange filing from Shanghai Chinafortune Co, the parent company of its partner China Fortune Securities Co. on Friday. It also won a bid to buy a further 36% stake in the fund management venture with China Fortune for 389 million yuan, according to a separate statement.

The moves come as China last year allowed foreign banks to gain full control of their local ventures. Financial groups including Morgan Stanley, Goldman Sachs Group Inc. and UBS AG are rushing to capitalize on the opening of China’s $54 trillion financial industry by adding staff and expanding their footprint in everything from investment banking to asset management.

Morgan Stanley will own 90% of the securities venture and 85% of the fund management firm after the latest transactions, which are pending regulatory approval.

“These are important steps forward for Morgan Stanley as we look to build a leading, fully integrated financial services firm in China,” the New York-based firm said in a statement. “China continues to be an important strategic priority for Morgan Stanley and we are encouraged by the accelerated pace of opening-up of China’s financial markets.”

Goldman Sachs this week received approval from Chinese regulators to set up a wealth management joint venture with China’s largest bank to go after an asset pool it estimated will surpass $70 trillion by the end of this decade.

Other global banks are also aiming for full control of their securities ventures. JPMorgan Chase & Co. has boosted its stake in its venture to 71%. Citigroup Inc. is pushing to set up new investment banking and trading operations and plans to submit applications for licenses before June.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.