Struggling AJ Securities, which is based in Shanghai and a unit of industrial group AJ Corp, has been battling with a sizeable debt burden and is keen to boost its prospects by accessing foreign capital.
According to Reuters, the investment bank is looking to increase its presence in China and its stake in domestic investment bank China International Capital (CICC) will be used to gain access to the broker.
A senior brokerage executive told the news agency that Morgan Stanley is eyeing up a stake of at least 20 per cent, and possibly 50 per cent, in AJ Securities.
The stake Morgan Stanley purchases in AJ Securities will reportedly be determined by potential changes to the regulations governing foreign ownership of Chinese companies.
A senior securities industry executive revealed that discussions between Morgan Stanley and AJ Securities are at the preliminary stages, with no formal bid yet submitted.