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Optimistic CIC to buy more Morgan Stanley

CHINA Investment Corp will spend US$1.2 billion in buying common shares offered by Morgan Stanley because it is optimistic about the company's future growth and progress.

The country's US$200-billion sovereign wealth fund will buy 44.7 million shares to raise its stake in Morgan Stanley back to 9.86 percent, the size of the original stake CIC held in Morgan Stanley in 2007.

CIC's equity ownership was diluted to 7.68 percent in October 2008 when the Mitsubishi UFJ Financial Group Inc invested in Morgan Stanley.

"The new purchase can reduce overall cost basis and increase the returns potential for our company," CIC said.

Morgan Stanley announced on Tuesday that it had priced a public offering of 80.2 million shares of common stock to the public at US$27.44 per share for US$2.2 billion.

The offering would bring it closer to repaying US$10 billion it borrowed under the US Treasury's Troubled Asset Relief Program, said the sixth-largest US bank by assets.

"Morgan Stanley is widely expected to be able to leverage on its strengthened financial position and will be on the road to resuming its successful trajectory amid the dramatic restructuring of the international financial services industry," CIC said.

Meanwhile, Mitsubishi UFJ Financial Group Inc has agreed to purchase 16 million shares of common stock at the public offering price.


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