Chillin' out till it needs to be funded
Morgan Stanley’s first skirmish with Volcker’s rule is tying it up in knts as Fund managers of its Infrastructure Fund in the new series are even asking for MS to spin out the Infrastructure Funds so it can get more Capital contribution and more profits to spread between fund managers. In the current scheme, Morgan stanley’s cut in contribution from 10% to 3% has not only affected the size of the offering and asked for more offerings but also stunted the compensation fund managers of Morgan Stanley Infrastructure Partners can expect as it comes from the MS contribution. In the meantime there have been enough funds to go around and Fund Managers have raised the stakes from their own funds too.
Meanwhile the Grimes and Cory led Menlo Park Technology Investment Bank office continues to struggle with legal action from the Facebook issue Charles Cory was behind M&A deals like Oracle -Siebel and Oracle – Hyperion while also oversseing the $2 B JD Edwards – Peoplesoft combination. While Grimes could boast of Groupon, Linkedin and Zynga a arevolution that collapsed on the Facebook IPO which continues to travel south on the charts. The dealmaker Charles Cory returned from Academia earlier this year. Investment Banks UBS and Goldman Sachs have announced cuts of 60 and 30 Sales and trading staff this week trimming their investment bank.
Four Infrastruture fund key execs have left in 2012 including Asia where India is among nations fast tracking Infrastructure Investments to grow past the China megalith in the coming three decades. PE Houses like Blackstone and Carlyle do not have similar constraints imposed on them by the Paul Volcker Rule as Morgan Stanley chooses to follow Goldman Sachs in keeping its banking licenses for Fed favors. Goldman Sachs and Citi cut away most pieces of Private Equity and hedge funds from their bank / investment bank arm in line with the requirements from the new rules while some capital allocation rules ar eyet to be clarified in their final form Fund managers in the new series have already been signed on to 60% of the Carried Interest the bank counts as its profits instead of the earlier 50%.
Earlier KKR had spun the top of Morgan Stanley’s European Infrastructure fund business when it offered a senior executive a position for KKR Europe and a few others left Morgan Stanley last year in Europe as well.