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Morgan Stanley PE Asia invests $300m in Tianhe Chemical

22 Mar 2012

Morgan Stanley Private Equity Asia has sealed the largest investment from its third fund after buying a $300m stake in Chinese chemical heavyweight Tianhe, in a deal that will enable the business to expand into the US and Europe.

Tianhe Chemical Group is the biggest producer of lubricant oil additive in China and the fifth largest global producer of specialty fluorochemicals, a technology used in chemical waterproofing.

Although the size of the stake was not disclosed, news reports indicate the firm, which has invested around $2.4bn in Asia since inception, has bought a minority holding in the company.

Tianhe’s expansion is likely to come through building cross-border relationships at first, as opposed to M&A activity.

The company was said to be mulling a London IPO, although market volatility forced it to shelve plans for the listing. The company has reportedly revived plans for the listing.

MSPEA is also said to be in talks to buy an 80 per cent stake in Chinese luxury packaging company HCP Holdings, in a deal that could value the business at around $500m. UBS is advising the firm and seeking a $260m loan to back the transaction.

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