Morgan Stanley to Let Wealthiest Clients Invest in Private Companies

Morgan Stanley has created a private-share program for its wealthy clients to invest directly in privately held companies, Ben Huneke, the wirehouse’s head of Investment Solutions, disclosed in an internal company announcement shared with ThinkAdvisor on Tuesday.

To head the new Direct Investment Access Program, Michael Gaviser has joined Morgan Stanley and its Investment Solutions team, reporting to Huenke. Gaviser, a KKR alum, has over 25 years of experience and leadership in strategy, business development and client service in the financial services industry, Huenke noted.

The news was first reported Tuesday morning by The Wall Street Journal, which reported that the program would be open to clients with at least $20 million in assets.

The ability to invest in private companies has been “particularly sought after as the number of public companies has halved in the past 25 years and private company market capitalization has grown at three times the rate of the public markets since 2000,” he explained.

Meanwhile, a growing number of asset managers are moving into private investment markets for alternative investments. They’re offering those investments directly, sometimes in partnership with an outside firm, or acquiring firms that specialize in nonpublic assets.

Morgan Stanley has previously offered direct private investments to clients, Huenke noted.

“But this enhanced and formalized program will uniquely position us to deliver a differentiated deal flow to our clients through” several existing businesses at the wirehouse, he said.

Those businesses include: Morgan Stanley at Work, which has relationships with “many of the most successful and largest private companies”;  the firm’s alternatives platform, which has become “one of the largest distributors and asset gatherers for many leading private investment firms;” and its investment bank, a global equity underwriter with an active private capital-raising effort for clients, he said.

Huneke called the Direct Investment Access Program a “first step in uniting these businesses and disciplines to the benefit of our clients,” pointing out that many “are already investors in the segment or are executives of private companies.”

Before joining the wirehouse, Gaviser was the head of strategy and business development at GrowthCurve Capital, a boutique private equity firm. Prior to that, he was head of capital raising and investor relations at Navab Capital Partners.

Before Navab, he was a managing director and senior distribution leader at KKR, where he concentrated on fundraising for private equity, private credit, real estate, special situations and infrastructure funds, Huenke said.

“I look forward to providing further updates on this groundbreaking new offering,” Huenke said at the end of the announcement. But he didn’t specify when that will happen or what kind of updates are planned.

(Pictured: Morgan Stanley headquarters in New York; Photo: Bloomberg)