The move adds $5 billion in assets under management to Morgan Stanley’s investment management business, a unit that CEO James Gorman has said he is looking to grow substantially in the coming years.
Investment management, led by former Morgan Stanley capital markets executive Dan Simkowitz, had $435 billion in assets under management as of June 30 and represents about 7 percent of Morgan Stanley’s overall revenue.
Besides acquisitions, the investment management group is launching new funds as it seeks to grow.
Morgan Stanley is raising a new fund from clients that will invest in niche assets, Reuters reported in July. It has begun to raise capital for other funds as well, focusing on Asian companies and sustainable investments.
At a financials conference in June, Gorman said 2017 was “sprinkling the seeds” for growth in investment management which may pay off in the next three years.
He also said Morgan Stanley wasn’t “clamoring to do deals” but could add scale in fixed income and alternative assets.
Businesses like wealth and investment management are considered more stable sources of revenue than trading, where profits can swing wildly each quarter.
But the popularity of passive investments like exchange-traded-funds has put pressure on the asset management industry to lower fees and to build out other areas like private equity and real estate.
Reporting by Olivia Oran in New York; Editing by Nick Zieminski