Morgan Stanley，a U.S. investment bank, gets a prime opportunity to take control of its Chinese joint venture after China Fortune Securities, the other shareholder of the joint venture, recently disclosed its plan to sell a fraction of its holdings in the joint venture, the China Securities Journals reported.
According to an announcement released by China Fortune Securities on September 11, the company had decided to put on sale a two-percent ownership it currently holds in the joint venture in the Shanghai United Assets and Equity Exchange (UAE).
After the sale, China Fortune Securities, which currently holds a 51-percent ownership in the joint venture, will give up its status as the controlling shareholder.
The sale also provides Morgan Stanley, which now holds a 49-percent ownership in the joint venture, with an opportunity to take control of the joint venture.
So far, it is unclear whether or not Morgan Stanley will buy the additional shareholding.
Since China Fortune Securities chose to sell its ownership in the UAE, it is also possible that the shareholding on sale will eventually be bought by a third party.
"This transaction will be conducted in the open market," said Hu Zhikui, secretary of the board of the Shanghai China Fortune Co., the parent company of China Fortune Securities. "That means that any eligible investor can bid for the shareholding."
Morgan Stanley initially held a 33.33-percent ownership of the joint venture when it set up the joint venture in June 2011 and then increased its shareholding to 49 percent in September 2017.
Since the Chinese government loosened the limit on foreign ownership in China's securities industry in April, foreign securities firms including the United Bank of Switzerland, Nomura Holdings and J.P. Morgan have all applied to the China Securities Regulatory Commission (CSRC) for raising their shareholdings in their Chinese joint ventures to 51 percent.
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