Random Ramblings: Morgan Stanley & More

A reader asks: “Does it make any sense that Morgan Stanley is getting back into private equity? I thought they left because of conflicts with advisory clients. Have those conflicts somehow evaporated?”

I hear you dear reader, and have been wondering the same thing myself. Morgan Stanley isn’t talking yet – partially because new group co-head Stephen Trevor is required to honor a six month non-compete with Goldman Sachs – but the apparent idea is to focus on co-investments with clients, instead of joining bidding groups that compete with clients.

This lowers the conflict-of-interest bar a little, but not entirely. What if Morgan Stanley’s private equity group is feeling pressured to put money to work? Could such pressure end up clouding its advice to clients? And what if an advisory client wants to fund a deal itself, without Morgan Stanley’s cash. Will the advisors focus more on other deals with co-investment opportunities? There are more such hypotheticals, which will have to be worked out before the group begins activity.

*** Yesterday I asked you to name the latest insurance company fund-of-funds group that’s going independent. The answer is the Swiss Re, via a deal with Horizon21.

*** Finally, I hope to see many of you at today’s Master Class on Fundraising for PE and VC firms in New York. I’ll be doing a keynote interview with Barry Gonder of Grove Street Advisors at 2:30…