Morgan Stanley expands, re-brands PE division(3)

The US investment bank is continuing to strengthen its private equity team, now called Morgan Stanley Private Equity, as it raises a $6 billion debut fund just three years after spinning out its in-house PE group.

Morgan Stanley’s return to private equity gained momentum this week, as the US investment bank added a managing director and re-branded its Morgan Stanley Capital Partners division Morgan Stanley Private Equity.

Seasoned chief executive Gary Matthews will join Morgan Stanley Private Equity as a managing director and operating partner. His experience includes leading both public and private equity-backed company business units at firms including Simmons Bedding Company, Bristol-Myers Squibb and Derby Cycle Corporation.

“Gary is a proven CEO in both the public and private equity arenas, and has generated top and bottom line growth for more than two decades by transforming internally focused companies into market driven organizations,” said Stephen Trevor, co-head of both Morgan Stanley Private Equity and the firm’s newly organised merchant banking division. “Operating partners are critical to our strategy of building a world-class private equity franchise and we are pleased to welcome Gary to the team.”

Morgan Stanley Private Equity is led by Trevor, who was recruited from Goldman Sachs last year, and fellow co-head Alan Jones, who was promoted internally. The division is building upon the foundations left by Morgan’s previous in-house buyout group, which it spun out as Metalmark Capital three years ago. Metalmark manages all of Morgan Stanley Capital Partners’ past funds, save for its Asian fund.

A source close to the bank told PEO that Morgan’s current chief, John Mack, finds greater merit in private equity activities than did former CEO Phillip Purcell, despite the asset class’ fluctuating effects on short-term earnings reports.

As it raises a $6 billion global fund, to which sources say the bank has committed $2 billion already enabling it to ink deals, Morgan Stanley Private Equity is bolstering its staff worldwide. The human capital swell includes at least one former Metalmark managing director, Eric Fry, who has returned to work with the investment bank’s New York team.

In addition to the 30-some employees already in place in Hong Kong, Morgan’s private equity arm has about 15 New York-based employees. It will have roughly the same amount in London, where Brian Magnus, previously Morgan’s head of UK investment banking, was recently appointed co-head of the European private equity business, alongside the former head of Lazard’s European buyout arm, Graham Keniston-Cooper, who was hired in July.

Morgan Stanley Private Equity may augment those teams with five or so additional professionals, based in Tokyo, to focus on global investment opportunities, a source said.

The private equity group is part of the merchant banking division Morgan organised earlier this year. Led by Trevor and Jay Mantz, the division consists of private equity, infrastructure and real estate funds.