Morgan Stanley 2010 Annual Report Download - page 250

MORGAN STANLEY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The Company’s significant equity method investees at December 31, 2010 and 2009 were as follows:
Percent
Ownership
Book Value
December 31,
2010
December 31,
2009
(dollars in millions)
Mitsubishi UFJ Morgan Stanley Securities Co., Ltd(1) ............... 40% $1,794 $—
Lansdowne Partners(1)(2) ...................................... 19.8% 284 292
Avenue Capital Group(1)(2) .................................... (3) 275 234
China International Capital Corporation Limited .................... 34.3% — 269
(1) Book value of these investees exceeds the Company’s share of net assets, reflecting intangible assets and equity method goodwill.
(2) The Company’s ownership interest represents limited partnership interests. The Company is deemed to have significant influence in
these limited partnerships, as the Company’s limited partnership interests were above the 3% to 5% threshold for interests that should be
accounted for under the equity method.
(3) The Company’s ownership interest represents limited partnerships interests in a number of different entities within the Avenue Capital
Group.
On May 1, 2010, the Company and MUFG closed the transaction to form a joint venture in Japan of their
respective investment banking and securities businesses. MUFG and the Company have integrated their
respective Japanese securities companies by forming two joint venture companies. MUFG contributed the
investment banking, wholesale and retail securities businesses conducted in Japan by Mitsubishi UFJ Securities
Co., Ltd. into one of the joint venture entities named Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
(“MUMSS”). The Company contributed the investment banking operations conducted in Japan by its subsidiary,
MSMS, formerly known as Morgan Stanley Japan Securities Co., Ltd., into MUMSS (MSMS, together with
MUMSS, the “Joint Venture”). MSMS will continue its sales and trading and capital markets business conducted
in Japan. Following the respective contributions to the Joint Venture and a cash payment of 23 billion yen ($247
million), from MUFG to the Company, the Company owns a 40% economic interest in the Joint Venture and
MUFG owns a 60% economic interest in the Joint Venture. The Company holds a 40% voting interest and
MUFG holds a 60% voting interest in MUMSS, while the Company holds a 51% voting interest and MUFG
holds a 49% voting interest in MSMS. The Company continues to consolidate MSMS in its consolidated
financial statements and, commencing on May 1, 2010, accounted for its interest in MUMSS as an equity method
investment within the Institutional Securities business segment.
Lansdowne Partners is a London-based investment manager. Avenue Capital Group is a New York-based
investment manager. The investments are accounted for within the Asset Management business segment.
The Company also invests in certain structured transactions and other investments not integral to the operations
of the Company accounted for under the equity method of accounting amounting to $2,767 million and $2,458
million at December 31, 2010 and 2009, respectively.
244