MS acquires stake in China’s largest cement company

Morgan Stanley and the World Bank have taken a 14 percent stake in publicly traded Anhui Conch Cement, mainland China’s largest cement company, for approximately $215m.

A consortium led by Morgan Stanley’s Asian private equity arm, MSPEA, has signed a definitive agreement with Anhui Conch Cement Company, mainland China’s largest cement company, to acquire a 14.3 percent stake in the company. Based on the company’s closing share price last Friday, the deal would be valued at approximately HK$1.7 billion ($215 million; €182 million).

We are pleased to build on our existing relationship with the company and hope the equity investment…will enhance management standards.

Karen Finkelston, IFC associate director

Morgan Stanley is partnering with International Finance Corp, the investment arm of the World Bank, to acquire 180 million shares of the Hong Kong- and Shanghai-listed company. MSPEA will reportedly own the bulk of the share holdings, 132 million, while IFC, which recently provided a loan to the company, will own the remainder.

“We are pleased to build on our existing relationship with the company and hope the equity investment and the share reform plan will enhance management standards,” IFC associate director Karin Finkelston said in a statement.

Although the company’s profit has declined in recent months due to government efforts to limit the growth of China’s real estate market, the company’s share price is up more than 30 percent in the past three months. Anhui Conch, the fifth largest cement company in the world, is majority-owned by the Anhui provincial government.

By acquiring a stake in the company, Morgan Stanley is following in the footsteps of many other private equity firms in China hoping to profit from the country’s rapidly expanding real estate and infrastructure markets. Earlier this year, Morgan Stanley closed a $515 million Asian private equity fund, its first vehicle dedicated specifically for the region.