THE Asian private equity arm of Morgan Stanley has invested $300m (£189.4m) in a Chinese chemical firm which is plotting an expansion into the West.
The bank will take a minority stake in Tianhe Chemicals Group, which has a dominant market share in lubricant oil additives in China and is the fifth largest globally in the high-end fluorochemicals sector, a technology often used in chemical waterproofing.
Homer Sun, chief investment officer of Morgan Stanley Private Equity Asia, will join Tianhe’s board as part of the deal.
He said Tianhe has developed a product portfolio with major technical barriers to entry.
“These will enable it to further consolidate market share in China and expand into overseas markets”.
Xuan Wei, chief executive of Tianhe, said: “MSPE Asia brings deep experience adding value to companies in China coupled with industrials expertise and global resources, and we look forward to working together to expand our global market reach and increase co-operation with overseas partners.”
The deal will help Tianhe’s plans to expand into the US and Asia although that growth is likely to come initially through cross-border co-operation rather than acquisitions.
Last year Tianhe, based in the coastal city of Jinzhou, was reportedly considering a $1bn initial public offering (IPO) in London before market turmoil forced it to put off its plans.
Yesterday, however, sources said the firm still plans to conduct a listing in future.
Morgan Stanley Private Equity Asia has invested about $2.4bn in Asia, primarily in highly structured minority investments and control buyouts.
The Tianhe deal is the largest single investment from the firm’s third Asia fund.