Morgan Stanley: Private Market Evergreens in High Demand

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Transcript

00:00How are they feeling about these markets at the moment?

00:02XU markets are trading at pretty punchy multiples, credit spreads are tight.

00:05The Journal's got a piece talking about cracks in the luxury housing market beginning to open up this morning.

00:11How are they feeling? Is this a nervous market right now?

00:15I would not define the market as a nervous market.

00:18I would say that our clients are very engaged.

00:21They're engaged both in the private markets and in the public markets.

00:24And what you're seeing is you're seeing this expansion and growth in the private markets

00:29that's enabling clients to stay and companies to stay private for longer.

00:34And what that really means is that there's a whole ecosystem from private to public

00:38that's allowing a healthy dynamic across high yield, investment grade credit, levered loans,

00:44all the way into the private credit space as well.

00:48And so you're seeing an embrace then of private markets.

00:53As that offering, the private markets offering, gets out to more and more customers,

00:58you have to think differently about risks and transparency and all of that.

01:02How do you manage the risks on that side?

01:04Our clients are mostly focused on getting access to those private companies.

01:08And so what that means is they're going to, in many cases, leverage the best-in-class asset managers

01:13that are on our platform.

01:15So Morgan Stanley is the largest distribution platform for alternatives, as an example.

01:20And we've seen that space grow tremendously.

01:23So the private markets are now at $13 trillion in size.

01:26But the individual investor is a very small percentage of that.

01:30And so their question is, do I go through funds?

01:33Do I think about more liquid structures, a huge demand for evergreen structures that are on our platform?

01:38But increasingly also, how do I get access if I'm a higher net worth or family office individual

01:43into a co-investment directly into a company?

01:46And what that means is that for names like Stokespace, most recently CoreWeave, MedSpa,

01:52these are companies that we're giving access to our clients to directly.

01:55And we can access a lot of different sources of that.

01:58We can do a tender offer for a private company on our platform, providing liquidity for those

02:03private employees, but also access to our ultra-high net worth demand.

02:07We can go to our investment bankers.

02:09We can go to our financial advisors.

02:10And really, the largest source of our deal flow for co-investments is from our asset manager partners.