Morgan Stanley Direct Lending Fund raises $103.35 million in IPO

(Reuters) – Morgan Stanley Direct Lending Fund said on Tuesday it had raised $103.35 million in its initial public offering.

The fund chiefly invests in riskier bonds, like those issued by middle-market companies or by private equity firms looking to finance their acquisitions.

Such bonds typically fetch higher interest than top-rated corporate debt. The interest income is Morgan Stanley Direct Lending Fund’s primary source of revenue.

The demand for such funds has grown in recent years as heightened regulation prompts traditional banks to re-evaluate exposure to risky sectors.

These funds are also well-positioned to capitalize on the appetite for acquisition financing as mergers and acquisitions rebound this year.

Morgan Stanley Direct Lending Fund is managed by a unit of Wall Street giant Morgan Stanley and intends to use the proceeds from the IPO to pay down some of its debt.

It sold 5 million shares of common stock for $20.67 each and intends to list on the New York Stock Exchange under the symbol “MSDL” on Wednesday.

Morgan Stanley, JP Morgan and Wells Fargo are among the underwriters for the offering.

(Reporting by Niket Nishant and Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)