Reuters: Private Equity: UPDATE 1-M.Stanley private equity buys $300 mln stake in China's Tianhe

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UPDATE 1-M.Stanley private equity buys $300 mln stake in China's Tianhe Mar 21st 2012, 09:00 Wed Mar 21, 2012 5:00am EDT * Morgan Stanley's private equity arm to take minority stake-source * Deal to help Tianhe expand into U.S., European markets-source * Tianhe would expect to go ahead with listing in future-source By Stephen Aldred HONG KONG, March 21 (Reuters) - Morgan Stanley's Asia private equity arm has invested $300 million in China's Tianhe Chemicals Group, the two companies said on Wednesday, a deal that will help the specialty chemicals maker expand into the U.S. and European markets. Morgan Stanley's private equity arm would take a minority stake in Tianhe Chemicals, according to a person with knowledge of the matter. Tianhe has a dominant market share in China in lubricant oil additives and is the number 5 player globally in the high-end fluorochemicals space, a technology often used in chemical waterproofing. Tianhe last year was reported to be looking at a $1 billion IPO in London. That deal was hit by global market volatility and has been postponed for now, but the firm would expect to go ahead with a public listing in the future, the source said. As part of the deal, Homer Sun, the fund's chief investment officer, will join Tianhe's board. Sun told Reuters Tianhe has developed a product portfolio with formidable technical barriers to entry. "These will enable it to further consolidate market share in China and expand into overseas markets," he added. The investment and strategic relationship with Morgan Stanley will internationalise Tianhe's operations and allow it to expand into the U.S. and Europe, said the source, who could not be named as they were not authorised to talk to the media. That expansion will come initially through developing customer relationships and cross-border cooperation, rather than through acquisitions, the source added. Morgan Stanley Private Equity Asia has invested about $2.4 billion in Asia, primarily in highly structured minority investments and control buyouts. The Tianhe deal is the largest single investment out of the firm's third Asia fund. Link this Share this Digg this Email Reprints

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