Morgan Stanley, owner of the world’s largest brokerage, closed fundraising for its first corporate mezzanine fund, Morgan Stanley Credit Partners LP, with $956 million in capital commitments.
The fund, which invests in fixed-income securities issued by mid-sized corporations, has already invested more than $160 million in five companies, New York-based Morgan Stanley said today in a statement. The fund will focus on companies in North America and Western Europe, according to the statement.
The fund is part of the firm’s merchant-banking business, which includes real estate, private equity and infrastructure funds and accounts for $24 billion of Morgan Stanley Investment Management’s $273 billion in assets under management. MSIM, run by Gregory Fleming, returned to profitability in 2010 after two years of pretax losses.
“The market for mezzanine-debt investing is benefiting from favorable secular trends resulting from an underlying imbalance between the demand for and the supply of capital, particularly for middle market companies,” Hank D’Alessandro, head of Morgan Stanley Credit Partners, said in the statement. “We already have a robust investment pipeline in place, and we believe the fund is well-positioned to continue to benefit from these dynamics.”
The fund’s target investment size is $20 million to $50 million and it may partner with other funds for larger transactions, according to its website. D’Alessandro, who joined Morgan Stanley in 1997, was previously head of the firm’s U.S. financial sponsor leveraged-finance business.