MS returns to private equity

Morgan Stanley has made a move back into private equity last by hiring Stephen Trevor from Goldman Sachs to co-run a new group within its asset management division.

Trevor, who was a managing director within principal investments at Goldman, will co-run the new group with Alan Jones, who was head of Morgan Stanley’s corporate finance department. They will report to Owen Thomas, chief operating officer of Morgan Stanley Investment Management.

Trevor will join Morgan Stanley in March 2007, after some gardening leave.

Morgan Stanley spun off most of its private equity business two years ago due to a concern it shared with many banks that its investing was causing conflicts with clients. But the subsequent success of Goldman Sachs in generating enormous private equity profits without significant loss of banking business has forced its competitors, including Morgan Stanley, to revisit their strategy.

Trevor joined Goldman Sachs in 1992 after a stint at Time Warner. He worked in Hong Kong and London, before moving to New York to focus on principal investments in the industrial sector.

Jones was co-head of the financial sponsors group at Morgan Stanley before being appointed head of corporate finance last year. From 2000 to 2001 he was co-head of global leveraged finance and from 2001 to 2002 he was sole head of global leveraged finance.

Morgan Stanley spun off much of its private equity business in 2004 as a stand-alone company called Metalmark Capital, before its current reverse of course.