Morgan Stanley plans to raise $2.2 billion in common equity to bring it closer to repaying its TARP loans, the company said on Tuesday.

Selling the additional common shares, some of which would be acquired by existing Morgan Stanley shareholders China Investment Corp and Mitsubishi UFJ Financial Group Inc <8306.T>, would help satisfy criteria for repaying the $10 billion it borrowed from the U.S. Treasury's $700 billion Troubled Asset Relief Program, known as TARP.

While Morgan Stanley said approval to repay TARP funds has not yet been granted, it hopes to make the repayment before the end of June.

Morgan Stanley will serve as the bookrunner for the offering. The underwriter will have a 30-day option to purchase up to an additional 5 percent of the offered amount of common stock from Morgan Stanley to cover overallotments, if any.

(Reporting by Steve Eder, editing by Gerald E. McCormick)