China, Corporate Finance and M&A, Featured Work, Politics, Sovereign Wealth Funds - Tuesday, December 1, 2009 9:59 - 0 Comments

The Spectator: CIC changes tack

Spectator Business, December 2009

Andrew Ross Sorkin’s Too Big To Fail, the behind-the-scenes account of Wall Street’s brush with oblivion, contains an interesting detail that tells us a lot about the power of Chinese money. In that lurching week in September 2008 after Lehman collapsed, Morgan Stanley – by now looking perilously close to the edge – invited Gao Xiqing, the president of the China Investment Corporation sovereign wealth fund, to New York to talk about increasing the 9.9% stake it already held in the American bank to as much as 49%. In those uncertain days, it looked like a deal that could save the whole bank.

Gao, lying flat on his back on a couch in a Morgan Stanley conference room to ease his bad back, offered the ultimate lowball offer for the increased stake: up to $5 billion and a credit line. Even in those dark days the American firm was considered to be worth $40 billion, and it was a sufficiently hardcore negotiating stance to shock even the archetypal Wall Street ballbuster, Morgan Stanley chief John Mack. Sorkin says Mack was “stunned”, and anyone who’s ever met the man knows that takes some doing.

Continue…

Popularity: 2% [?]