CHINA Strategic Investment (CSI) is raising $360 million through a share issue to a group of investors led by Morgan Stanley Group Inc to fund its aggressive acquisitions of industrial facilities in China. The Indonesian-controlled company is placing 63 million new shares, or 16.7 per cent of its existing capital, at $6 each, with Morgan Stanley taking 13 million shares as long-term investment. The placing price of $6 represents a 17.2 per cent discount to the closing price of $7.25 on Wednesday. Trading in CSI shares and warrants, which was suspended yesterday, is expected to resume today. Analysts were not surprised to learn about the fund-raising exercise, which was seen as necessary to fuel CSI's massive acquisition of industrial enterprises, under way since the middle of last year. The direct investment by Morgan Stanley in CSI, which has developed into a China industrial player, is seen as an interesting note. CSI chairman Oei Hong Leong said the company was delighted to have such ''prominent'' international investors among its shareholders. ''We believe this placing represents an important moment in CSI's development as it broadens our shareholder base and enhances our credibility in the international markets,'' he said. ''While the capital we have raised is important, the relationship it establishes with Morgan Stanley and the other investors will be even more beneficial to CSI over the long term.'' Mr John Wadsworth, head of Morgan Stanley Asia, which arranged the placement, said Morgan Stanley's investment in CSI was an important part of its strategy in Asia. ''We plan to continue looking for long-term investments in Asia, particularly China,'' he said. ''As we look for ways to broaden our exposure to China, we feel that this investment will provide financial and strategic benefits to both Morgan Stanley and CSI.'' CSI indicated that it would use the proceeds of the placing to invest in its industrial programme in China where it had achieved control of more than 180 factories in various cities. Must of the capital would be used to upgrade the facilities of these factories and to pursue further acquisitions of mainland industrial assets, it said. CSI, which was taken over by Indonesian-backed Sanion Enterprises in late 1991, kicked off its mainland acquisition trail in July last year by taking control of 41 factories in Quanzhou, Fujian province. Eventually, it achieved control of more factories in other areas, including Hangzhou and Ningbo in Zhejiang province and Shanxi province. Last month, the group entered into a 51 per cent-owned joint venture to take control of 101 factories in Dalian, Liaoning province. It is required to contribute 510 million yuan (about HK$692 million) in cash in stages over four years.