Morgan Stanley has struck a deal with investment manager Invesco which will see the US bank sell its retail asset management business for $1.5 billion in stock and cash.
The purchase price includes $500 million in cash and $1 billion in stock. Morgan Stanley is to acquire a 9.4% equity stake in Invesco, making it Invesco's largest shareholder. The sale to Invesco has received the approval of boards at both companies and should be completed by mid-2010.
Commenting on the deal, Morgan Stanley co-president James Gorman, said: "By taking a minority interest in Invesco, Morgan Stanley will be able to realise significant value in partnership with a world class player."
Many banks, including Bank of America and Barclays, have agreed to sell their fund businesses this year and the news comes after Lloyds Banking Group today said it has sold some of its private client funds to Rathbone Brothers after concluding that they were "no longer core" for the bank.
The economic downturn has meant banks are embarking on strategic reviews and major restructures, which has resulted in sales of assets and parts of their businesses.
In related news, Morgan Stanley is scheduled to announce its third quarter results tomorrow. Last week, JPMorgan Chase, Goldman Sachs, Citigroup and Bank of America all reported their Q3 results.