Morgan Stanley raises $1.5bn for mid-market deals

North Haven Capital Partners VI is the firm’s first mid-market fund since 2009.

Morgan Stanley Capital Partners, the private equity arm of Morgan Stanley Investment management, has raised more than $1.5 billion for its latest fund, according to a statement from the firm.

North Haven Capital Partners VI will target mid-market companies, primarily in North America, with enterprise values of between $100 million and $1 billion and EBITDA of between $10 million and $100 million. It will seek investments within the business-to-business services, consumer, and industrial segments.

The firm said it pursues opportunities in which it is “uniquely positioned to add value through advantaged sourcing, distinct perspectives for operational improvement, and industry expertise and relationships”.

Originally called Morgan Stanley Capital Partners VI, Morgan Stanley renamed the fund in April 2015 to adhere to the Volcker Rule requirement that banks not include their own name as part of the name for their private investment funds.

The fund has already deployed more than $378 million across six investments, the firm said.

“Our team’s operationally focused approach to generating alpha resonated with investors, and the fund had especially strong backing from institutional clients,” Alan Jones, co-head of Morgan Stanley Private Equity, said in the statement.

The fund’s predecessor, Morgan Stanley Capital Partners V, closed on $1.2 billion in 2009.

The Volcker Rule, a section of the US 2010 Dodd-Frank Act, restricts banks from trading off their own accounts and limits their investments in private investment funds to no more than 3 percent of the bank’s Tier 1 capital.

In October Private Equity International reported that Morgan Stanley still had around $2.3 billion of investments subject to the Volcker Rule. During the firm’s third-quarter earnings conference call, chief financial officer Jonathan Pruzan said the firm planned to request extensions for the overwhelming majority of those assets while simultaneously considering other options to dispose of them, including secondaries sales.

In December the US Federal Reserve said banks will be able to apply for an extension of up to five years to conform to the Volcker Rule, provided they demonstrate a good-faith effort to comply in time with the existing July 2017 deadline.

Morgan Stanley’s fourth-quarter 2016 earnings conference call is scheduled for 17 January.