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The mainland partner of MSN,  the Microsoft unit that runs instant messaging and other online services, wants to sell its interest in its joint venture little more than two years after it was launched, said a venture capital source.

Shanghai Alliance Investment, a US$140 million investment fund owned by the city government,  established the Shanghai MSN Network Communication in a 50-50 tie-up with United States software giant Microsoft in May 2005.

Shanghai Alliance Investment, reported to be run by Jiang Mianheng, a son of former president Jiang Zemin, is disappointed with the venture's lack of success and is looking for buyers of its stake, said the source.

Microsoft refused to comment on the issue.

'We do not comment on market speculation and will focus on our business growth and user demands,' a company statement said.

Shanghai Alliance Investment could not be reached for comment.

MSN Messenger, the instant messaging service that helps to attract people to the unit's main portal, has about 4.7 per cent of  the market by number of active users compared with 77 per cent for QQ, the most popular such service in the country, according to Beijing-based researcher Analysys.

The company's overheads are high and its revenue small, said the source. Most income is from annual fees paid by  mainland partners that provide content to the venture's website such as information on cars, finance, real estate and entertainment.

The buyer of the stake was unlikely to be another venture capital firm, said the source.

'No one is interested in MSN China because there is no exit. It belongs to Microsoft and it would be difficult to list independently,' said the source.

A potential buyer might be a company with business that could take advantage of MSN's traffic: '[Or] probably Microsoft will buy the stake itself to save it the embarrassment that no one wants the company.'

Lacking independence

Potential takers are deterred by the fact that Microsoft owns MSN

Shanghai MSN Network Communication's market share is only: 4.7%



Mainland MSN proving a white elephant for Shanghai Alliance