Morgan Stanley takes stake in Chinese lubricant additive producer

The Asian private equity unit of U.S. financial holding company Morgan Stanley is investing US$300 million in Chinese lubricant additive producer Tianhe Chemicals Group. This additional capital will help the family-owned company to expand its sales network outside of China. Tianhe had originally planned to launch an initial public offering (IPO) in London and Hong Kong in the second half of last year but nixed the plan due to the souring economic climate in Europe and slow economic recovery in the United States. Tianhe, based in Liaoning province in northeastern China, supplies lubricant additives to the country’s major oil companies, among others. Though Morgan Stanley is reportedly buying a minority stake only, Homer Sun, chief investment officer of Morgan Stanley Private Equity Asia, will become part of Tianhe’s board following the stake buy. “The company has invested 20 years developing deep, differentiated specialty chemicals know-how that has enabled it to become a dominant player in China,” Sun said. “It is now in a position to move towards the center of the global stage.” Tianhe is also a leader in the global production of speciality fluorochemicals, the statement said. The company employs more than 1,200 people. Morgan Stanley Private Equity Asia made the investment from its US$1.5 billion pan-Asian fund. Last year, it made a US$100 million investment in China XD Plastics Co. and US$50 million in Yongye International Inc., a seller of agricultural nutrients. (March 21, 2012)