Morgan Stanley Invests in Power While Plagued by Facebook Fiasco

PUBLISHED: Sep 04 2012 @ 11:30 | Comments (0) | More info about Lou Gutheil

Morgan Stanley (NYSE:MS) shares rose 1.77% to $15.28 on Wall Street today as news broke about its increased investment in Zhaoheng Hydropower, a Chinese renewable energy-focused power company. Perhaps Morgan Stanley is trying to find an investment that will draw attention away from its Facebook IPO fiasco.

Zhaoheng Hydropower

Along with Fountainvest Partners, a Chinese private equity firm, and Olympus Capital, Morgan Stanley has invested an additional $150 million into Zhaoheng Hydropower. The three made an initial $150 million investment in December 2010. Zhaoheng operates over 30 hydro plants in seven provinces with a current capacity of 650 megawatts. James Chen, the Executive Director of Morgan Stanley Infrastructure Partners said, “Our plan is to be a long-term investor and help Zhaoheng’s capacity grow to one gigawatt within the next two years.” He said that “there is tremendous potential for growth” in China’s renewable energy sector.

Zhaoheng was founded in 2002 in Shenzhen by its CEO Xu Guosheng. Based n Shenzhen, just across the border from Hong Kong, the company generates most of its energy and revenue in the Hunan Province.

The combined investment of Morgan Stanley and its partners represents the largest foreign investment to date in the Chinese renewable energy industry.

Facebook Fumble

Although Morgan Stanley’s balance sheet appears to be in fine shape, it is going to need several major successes to get investors’ minds off of the Facebook IPO fiasco for which Morgan Stanley was the lead underwriter – as Forbes magazine recently pointed out – with other people’s money. Not only that, but while competitor funds invested, on average, about 1% of their portfolios in Facebook, Morgan Stanley was much more aggressive, investing some $3 billion dollars of clients’ monies despite prolific warnings about Facebook being a less than stalwart investment.

Keep in mind the average 1% investment by competitor funds as you read the percentage invested in Facebook for the Morgan Stanley funds listed below.

7.72% Focus B Growth

6.72% Institutional Advantage H

5.19% Institutional Global Advantage I

4.79% Institutional Global Discovery I

6.42% Institutional Global Opportunity I

7.39% Institutional Opportunity H

6.63% Institutional Growth I

6.42% Multi-Cap Growth B

At some point Morgan Stanley is going to have to offset those investments to lessen their impact on the funds as a whole. That is, if they can pull it off under the current economic conditions.

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