Morgan Stanley’s asset management division has set itself a medium-term target of doubling the size of its private credit portfolio from $25bn to $50bn and is looking to mainly tap institutional investors for the additional cash, according to a report by Reuters.
The report quotes David Miller, the bank’s Global Head of Private Credit and Equity, as confirming that institutional investors, such as sovereign wealth funds and insurance companies, currently account for the bank’s current portfolio, with wealthy individuals making up the rest.
“The vast majority of new capital will continue to come over the next decade from our institutional clients,” Miller told Reuters.
Miller estimates the broader private credit market has grown as large as $2tn, with activity surging in the past two years as private lenders including Ares Management, KKR and Blackstone have moved to provide financing prompted by a drop off in traditional bank syndicated lending.
Wall Street banks, however, including Morgan Stanley, Goldman Sachs and JPMorgan, have found ways to participate in the new market by gathering money for loans from investors instead of using their own balance sheets.
