Morgan Stanley offers private equity fund for millionaire masses

A window washer cleans off the lettering at Morgan Stanley headquarters in New York. Photo by Mark Lennihan/AP files

Article content

Morgan Stanley & Co. is launching a private equity fund for its widest audience yet — investors wielding a few million dollars — as asset managers help broader masses into the once-exclusive realm.

Article content

Article content

The North Haven Private Assets Fund will offer exposure to co-investments and secondaries in the lower middle market, according to a statement Wednesday. The firm’s US$1.6 trillion investment-management arm hasn’t set a fundraising target but it could gather “a few billion dollars in the near to medium term,” Neha Champaneria Markle, head of private equity solutions, said.

Article content

Article content

Private equity firms once catered almost exclusively to institutions and ultra-wealthy clients able to analyze the risks — and stomach the potential losses — from putting money into investments spanning several years, potentially through shifts in the economy. That exclusivity frustrated throngs of smaller investors eager to hunt returns beyond public markets.

Article content

Article content

“We’ve had a front-row seat to the opportunity, appetite and demand for private equity in a format that is more user-friendly for individual investors,” Markle said. “There’s enough of an understanding about how private equity works, how these types of vehicles work, for us to be comfortable launching our strategy.”

Article content

The fund will be evergreen, meaning clients can periodically withdraw or contribute more capital. It will initially be available only to Morgan Stanley clients, with plans to open it more broadly at a later date, Markle said.

Article content

Article content

Alternative and traditional asset managers are rushing to develop more offerings for that wider audience. Last month, BlackRock Inc. chief executive Larry Fink pledged in an annual investor letter to open up private markets to millions of everyday investors so they can share in more of the gains from economic growth.

Article content

Article content

Goldman Sachs Group Inc. made a similar move earlier this month when it announced the launch of an open-ended private equity fund open to individuals with at least US$5 million in investments across their portfolios. Kristin Olson, Goldman’s global head of alternatives for wealth, said in a statement that “as more companies opt to stay private for longer and a greater share of economic growth occurs in private markets, investors will need to look beyond the public markets.”

Article content

Morgan Stanley’s investment-management unit is one of its three main business lines, alongside wealth management and institutional securities. The firm almost doubled assets under management in 2021 when it closed its purchase of Eaton Vance Corp.

Article content

Article content