MS · Earnings call · 2026Q3T · Full report

Sponsor Mandate Activity

MORGAN STANLEY · 2026-10-14 · Importance 21 · Surprise 24

Management said private-equity portfolio harvesting remains delayed because sponsors are using continuation funds or retaining assets that can generate low- to mid-double-digit IRRs in a higher-rate environment. Some sponsors remain constrained by marks and MOIC assumptions that do not reflect current weighted-average cost of capital, country risk, supply risk or AI risk. Ted Pick expects leading private-equity firms to bring companies to market through IPOs or M&A when the regulatory backdrop is supportive, but said sponsors may need to adapt to a less favorable low-rate, low-inflation environment. He characterized private-equity activity as a conditional positive tailwind, while noting that strategic corporate demand is currently leading the corporate-finance cycle.