Concern mounts over Morgan Stanley exclusive deal with state capital entity
Authorities in Vietnam are under pressure to ensure Morgan Stanley’s landmark joint venture with a leading state investment agency does not result in the US bank being favoured in the country’s mass privatisation programme. Morgan Stanley announced in March that it was to form a groundbreaking securities joint venture with the State Capital Investment Corp, placing it in pole position to take advantage of Vietnam’s booming economy.
The joint venture will provide investment banking services, including underwriting and trading of shares and bonds, and make principal investments. The Hanoi-based venture, which is subject to regulatory approval, is expected to begin operations in October.
SCIC was created in 2005 to take capital ownership of the communist-ruled country’s 5,000-plus state-run enterprises, which account for about 70% of Vietnam’s tax revenues.
Many of the enterprises are expected to join the stock market in the next few years and Morgan Stanley’s rivals fear that as a result of the joint venture they could be frozen out of lucrative mandates to advise on capital raisings.
It is understood that some rival investment banks have expressed their concerns over the issue to the government, as part of the approvals process. One rival banker, who declined to be named, said: “The government has been made fully aware of the feelings of other banks on this. The authorities should ensure that, regardless of the joint venture, there is a level playing field when it comes to choosing advisers for IPOs.”
Morgan Stanley declined to comment. However, it had previously signalled it was confident of securing full approval and that SCIC had chosen it as a partner because of its history in China where it owns a 34% stake in CICC, the mainland investment bank.
The stakes are high as Vietnam is Asia’s newest battleground for deal-hungry investment banks.
Category: Finance
