A Western private equity firm is investing in one of China's largest lubricant additives companies.
A private equity arm of Morgan Stanley is taking a substantial stake in Tianhe Chemicals Group, a lubricant oil additives manufacturer and high-end fluorochemicals producer. Tianhe was reported to be looking for a $1 billion IPO in London last year, but postponed over fears that the global economic crisis might affect the deal.
The strategic relationship with the Western investment group will hopefully internationalise Tianhe's operations, enabling it to expand into European and American markets. The large-scale investment will be primarily used to develop customer relationships and strengthen cross-border cooperation and not necessarily for acquisitions.
So far, Morgan Stanley Private Equity Asia has invested about $2.4 billion in Asia, mainly in control buyouts and highly-structured minority investments. However, the new deal with Tianhe will be the firm's largest single investment in the expanding region to date.