Investment Updates News
- U.S. review unlikely in CIC's purchase
Date: 21-Dec-2007 Sources: (Shenzhen Daily)
CHINA Investment Corp.'s purchase of a big stake in Morgan Stanley will likely avoid a formal U.S. Government review and probably won't face much political backlash as the credit crisis continues to buffet financial-services firms in the United States.
'It puts capital - much needed capital - into a New York institution that is fundamentally sound but has a bump in the road,'U.S. Democratic Senator Charles Schumer, said Thursday. 'I don't have a problem with it.'
U.S. President George W. Bush's administration won't say whether the deal will be reviewed by the Committee on Foreign Investment in the United States, or CFIUS, an interagency group chaired by U.S. Treasury Secretary Henry Paulson that looks at acquisitions and takeovers to determine if U.S. national security is at risk.
But the transaction appears to fall short of the general threshold for a CFIUS review. Because CIC is buying less than 10 percent of Morgan Stanley, the purchase isn't considered an 'acquisition.'And without a CIC seat on Morgan Stanley's board, the investment would likely be considered 'passive.'
CFIUS, which includes representatives from 12 federal agencies, never announces which deals it is reviewing. Companies sometimes include CFIUS approval as a condition of a transaction, and can publicly acknowledge that they have applied for a review. It's unlikely that Morgan Stanley or CIC would request a review.
A Treasury spokeswoman declined to comment on the CIC-Morgan Stanley transaction. The White House said it broadly welcomes foreign investment.
'Of course we welcome foreign investment in the United States, but we can't comment on individual transactions,'White House spokesman Tony Fratto said.
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