Morgan Stanley Investment Management holds final close on $1.6bn credit fund

North Haven Credit Partners III exceeds target by 29%, will focus on junior capital investments in private North American businesses.

Morgan Stanley Investment Management said it held a final close on $1.6 billion in its North Haven Credit Partners III, exceeding its original target of $1.25 billion by 29 percent.

The manager said in a press release that the fund, managed by the Morgan Stanley Private Credit team, will focus primarily on junior capital investments in private North American businesses, including second-lien debt, mezzanine debt, preferred equity and special situations.

A spokeswoman for the investment manager told Private Debt Investor that 26 percent of the fund, which was launched in May of 2019, had been invested, and that the portfolio would span industries, with no specific focus. She said that the fund would invest in both PE-backed and non-sponsored companies.

The fund received support from a range of new and existing investors, including public and private pension funds, sovereign wealth funds, insurance companies and individual investors. According to the PDI database, Teachers’ Retirement System of Louisiana contributed $100 million to the latest fund. Its predecessor, North Haven Credit Partners II, raised about $1 billion, the spokeswoman said.

The latest fund expands Morgan Stanley’s Private Credit business to more than $10 billion in investable assets, including anticipated leverage, David Miller, head of Global Private Credit and Equity for Morgan Stanley Investment Management, said in the news release. The latest offering builds on the firm’s “long and successful tenure in the asset class as a flexible capital solutions provider in the middle market”, he said.

Henry D’Alessandro, co-portfolio manager of NHCP III, said the firm believes that the fund holds “significant competitive advantages” by having access to the Morgan Stanley network for deal sourcing, investment research and due diligence. “Coupled with a track record of investing across market cycles and optionality to hold publicly traded debt instruments during periods of dislocation,” the firm believes it is “uniquely positioned” to deliver results to clients, D’Alessandro added.

The fund’s ability to structure and invest across the capital structure “is a key differentiator within the private credit system”, said Ashwin Krishnan, co-portfolio manager of NHCP.

Morgan Stanley Private Credit, part of Morgan Stanley Investment Management, is a private credit platform focused on direct lending and opportunistic private credit investment in North America and Western Europe. Morgan Stanley Investment Management, with its investment advisory affiliates, had $1.5 trillion of assets under management as of June 30, 2021. Both are part of Morgan Stanley, a global financial services firm based in New York.