The asset management subsidiary of Morgan Stanley collects money from big investors to lend to businesses, to double its private credit portfolio to $50 billion in the long term.
According to David Miller, global head of Morgan Stanley’s private credit and equity, the bank has put over $300 million into the company, which has already attracted over $25 billion in total assets from institutional investors.he vast majority of new capital will continue to come over the next decade from our institutional clients,” Miller stated. According to him, two-thirds of the present portfolio is held by institutional investors like insurance firms and sovereign wealth funds, with the other third coming from affluent people.
According to Miller, the size of the overall private credit market has increased to $2 trillion.Since the financial crisis, banks have found it more costly to fund riskier loans for indebted enterprises due to tightened restrictions. Direct lending is a major component of this expansion of private credit.
Laptops 1000The past two years have seen an increase in activity. Bank groups were able to provide less financing through typical syndicated loans as interest rates increased and banks’ capital became entangled in riskier loans. Private lenders including Blackstone, KKR, and Ares Management jumped in. Nevertheless, Wall Street banks have managed to get into the new market by using investor funds instead of their balance sheets to fund loans.
This month, David Solomon, the CEO of Goldman Sachs, disclosed to analysts the bank’s goal of raising $40 billion to $50 billion in alternative funds this year. That will be devoted primarily to personal credit, a person with knowledge of the situation says. $10 billion of JPMorgan’scapital has been set aside for private loans, according to people familiar with the situation.
