Morgan Stanley offers private equity fund to wider swath of millionaires

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

The North Haven Private Assets Fund will offer exposure to co-investments and secondaries in the lower middle market, according to a statement on Wednesday (Apr 30). The firm’s US$1.6 trillion investment-management arm has not set a fundraising target but it could gather “a few billion US dollars in the near to medium term,” Neha Champaneria Markle, head of private equity solutions, said in an interview.

Private equity firms once catered almost exclusively to institutions and ultra-wealthy clients able to analyse 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.

“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.”

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.

Alternative and traditional asset managers are rushing to develop more offerings for that wider audience. Last month, BlackRock chief executive officer 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.

Goldman Sachs Group 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.”

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. BLOOMBERG