Morgan Stanley Bolsters Co-Investment Fund with $2.3 Billion
Funding | Apr 14, 2025 | Vesey Street Capital Partners
Morgan Stanley Investment Management has gathered $2.3 billion for its North Haven Private Equity Co-Investment Opportunities Fund III, marking a significant milestone in its co-investment strategy. Headed by Neha Champaneria Markle, Morgan Stanley Private Equity Solutions targets buyout and growth investments in lower midmarket companies with enterprise value typically under $500 million. The fund has already participated in over 10 deals and plans to focus on specialist sector managers in North America and Europe managing less than $2 billion. Despite recent market volatility, Morgan Stanley's commitment to this segment stems from what Markle describes as an 'all-weather strategy.' This approach hinges on backing companies that require minimal debt financing, emphasizing traditional business growth. The fund has been supported by previous investors and notable new ones like the Wyoming State Loan and Investment Board. This launch capitalizes on a substantial demand-supply mismatch in co-investment capital seen since 2017.
Sectors
- Private Equity
- Asset Management
- Corporate Finance
Geography
- North America – A key target region for Morgan Stanley's fund investments, highlighting strategic growth opportunities in North America's lower midmarket enterprises.
- Europe – The fund also targets lower midmarket companies in Europe, indicating Morgan Stanley's interest in diversifying its investment portfolio across these regions.
Industry
- Private Equity – The article discusses a private equity fund launched by Morgan Stanley to invest in small to mid-sized enterprises, with co-investment and buyout activities as its focus.
- Asset Management – Morgan Stanley Investment Management is involved in managing assets and raising capital for its private equity co-investment fund, illustrating activities typical of the asset management industry.
- Corporate Finance – The fund focuses on buyout and growth investments, which are key activities of corporate finance, particularly in lower midmarket companies in North America and Europe.
Financials
- $2.3 billion – The total commitment collected for Morgan Stanley's North Haven Private Equity Co-Investment Opportunities Fund III (PECO III).
- 2.5 times invested capital – The return generated from the QualityMetric investment, backed by Vesey Street Capital Partners and Morgan Stanley.
- More than 30% – The internal rate of return (IRR) generated from the QualityMetric investment.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Morgan Stanley Investment Management | Bidding Company | Company | The asset-management arm of Morgan Stanley, managing the PECO III fund and other investment activities. |
| Neha Champaneria Markle | Head of Morgan Stanley Private Equity Solutions | Person | Leads the Private Equity Solutions team and plays a crucial role in the management and strategic direction of Morgan Stanley's co-investment fund. |
| Vesey Street Capital Partners | Other | Company | A healthcare services investor involved in past co-investment deals with Morgan Stanley, such as the QualityMetric transaction. |
| Wyoming State Loan and Investment Board | Investor | Government | A new investor in Morgan Stanley's PECO III fund. |