Several investors, including Morgan Stanley and China's Fosun Group, have expressed interest in buying into Shenyang Machine Tool (Group) Co. Ltd., the country's largest lathe maker.

Morgan Stanley started its due diligence on Shenyang Machine two weeks ago. It wants to buy 30 percent of the company. Fosun wants to buy a stake of no more than 19 percent. Shenyang Machine has discussed with several interested buyers, such as Morgan Stanley and Fosun.

The Chinese government has said it plans to auction a 49 percent stake in Shenyang Machine. It announced the plan in November and it is open to both domestic and foreign investors. But the stake foreigners can buy is capped at 30 percent.