Morgan Stanley edges towards final close on GP-led fund

If it hits its target, Ashbridge Transformational Secondaries Fund II will be the largest GP-led-dedicated fund to hold final close.

Morgan Stanley Alternative Investment Partners has crossed the 70 percent mark on its second fund dedicated to GP-led secondaries deals.

The alternatives arm of the global investment bank has raised $2.2 billion for Ashbridge Transformational Secondaries Fund II, according to a filing with the US Securities and Exchange Commission. The fund had collected $1.37 billion as of last June, Secondaries Investor reported.

“Ashbridge II is currently in market, having closed on over $2 billion at year-end 2021 and is on pace toward its target size of $3 billion,” a spokesperson for the bank told Secondaries Investor, adding that the fund was marked at a 1.5x net multiple as of 30 September, the fund’s most recent reporting data.

Fund II is targeting “growth-oriented” mid-market assets alongside managers with funds with less than $2 billion in commitments, according to documents prepared for the Wyoming State Treasurer’s Office. The fund will prioritise single-asset deals and aim for “buyout returns with a shorter time horizon”.

North America is set to account for up to 80 percent of the portfolio, the documents noted. Fund II had committed $1.09 billion across 11 assets as of March, has carried interest of 12.5 percent and a hurdle of 8 percent. The fund has a hard-cap of $3.5 billion, Secondaries Investor understands.

The 2016-vintage Ashbridge I raised $645 million and is fully invested, the documents note. It had delivered a net internal rate of return of 43 percent and net total value to paid in of 1.8x as of 30 September.

In December 2020, Nash Waterman took over as Morgan Stanley’s sole head of secondaries, as former co-head John Wolak moved into a senior advisory role.

Morgan Stanley sees an opportunity in companies that have grown through making add-on acquisitions and need more capital to continue with the strategy, Waterman told Secondaries Investor in February last year.

“You can see a clear playbook in terms of how the GP and management team has been able to target and integrate acquisitions, and how the management team and GP work together to build a better, more scalable business,” he said.