The Wall Street Journal-20080206-Morgan Stanley Nears Vietnam Pact

Return to: The_Wall_Street_Journal-20080206

Morgan Stanley Nears Vietnam Pact

Full Text (345  words)

HONG KONG -- Morgan Stanley is close to getting regulatory approval for a securities joint venture in Vietnam, which would allow it to underwrite initial public offerings and to more easily invest the firm's own money in Vietnamese companies, according to a person familiar with the matter.

That would give the Wall Street brokerage a new beachhead in the country, just after Vietnam's State Capital Investment Corp. scuttled plans for a previously arranged joint venture.

The new arrangement, which could be announced soon, would be with a local company, rather than with the SCIC. The SCIC holds most of the country's biggest state-owned companies. Rival global banks had complained that Morgan Stanley would get an unfair advantage in the country's burgeoning IPO market if the deal with the SCIC had gone through, according to a person familiar with the decision.

An SCIC spokeswoman didn't respond to requests for comment. A Morgan Stanley spokesman declined to comment.

Vietnam is privatizing its biggest state-owned companies as the country continues its transition to a market economy. Since 2006, Vietnamese companies have raised about $4.8 billion in IPOs, mostly on the domestic exchange, said Thomson Financial.

That is tiny compared with the slew of multibillion-dollar offerings issued in China in that period. But Vietnam's robust annual economic growth of around 8% and its entry into the World Trade Organization in January 2007 have encouraged global banks and investors to step up their efforts there.

In March, Morgan Stanley and the SCIC unveiled a joint-venture plan that would have secured the Wall Street firm a role in any spinoffs or asset sales controlled by the SCIC. In addition, Morgan's principal investment arm would get an early look at any assets going up for sale.

The firm has demonstrated a desire to put money to work in the country. Late last year, Morgan Stanley's principal investment arm paid $217 million for a 10% stake in Petrovietnam Finance Corp., the finance arm of Vietnam's state oil company.

Morgan Stanley's investment bank also is advising several Vietnamese companies on plans to go public.