Morgan Stanley prepares for mixed asset sale – exclusive

The bank is in talks with Houlihan Lokey to explore the sale of private equity, real estate and infrastructure stakes valued at as much as $2bn, Secondaries Investor has learned.

Morgan Stanley, the US’s sixth largest bank by assets, is preparing to sell stakes in various alternative asset funds that could involve between $1 billion to $2 billion in holdings, Secondaries Investor has learned.

The New York-headquartered bank is in talks with investment bank Houlihan Lokey to help it explore the disposal of interests in private equity, real estate and infrastructure funds, according to two sources familiar with the matter.

The bank wants to explore the sale of some of its assets to comply with the Volcker Rule, according to the sources.

Banks were active sellers in the years after the announcement of Volcker, a section of the US’s 2010 Dodd-Frank Act that restricts banks from trading off their own accounts and limits their investments in private investment funds to no more than 3 percent of the bank’s Tier 1 capital.

Banks accounted for as much as a quarter of 2014 deal volume, and this figure dropped to 18 percent last year according to Setter Capital, with banks postponing deals after Volcker’s implementation was extended to July 2017.

Financial institutions were expected to return as sellers this year to comply with next year’s deadline and are predicted to account for 14 percent of deal volume in the second half, according to a mid-year report by Setter.

Morgan Stanley and Houlihan Lokey declined to comment.