Morgan Stanley to spin out venture unit

Morgan Stanley Venture Partners, the venture arm of investment banking giant Morgan Stanley, will spin out as an independent venture capital firm called Crossmark Capital.

Crossmark will be led by William Harding, a current MSVP managing director, and will be run by the five other principals currently at the firm. The new firm will continue to maintain offices in New York and Menlo Park.

The spinout happens less than a year after Morgan Stanley in August spun out its  private equity unit, Morgan Stanley Capital Partners, now called Metalmark Capital. The firm is led by Howard Hoffen, the prior head of Morgan Stanley Capital Partners and an 18-year veteran of Morgan Stanley. Hoffen and senior management own Metalmark but continue to manage roughly $3 billion in funds for their former parent company.

Since its inception in 1986, MSVP has raised six funds with more than $1.2 billion in total committed capital. Crossmark will manage MSVP’s active funds through a sub-advisor role, while Morgan Stanley will remain the general partner of and retain its limited partner interests in the MSVP funds, according to a press statement.

The new management structure will be effective after closing conditions are met, though Morgan Stanley did not specify a date in its announcement.

“Similar to the dynamics of the private equity market when Morgan Stanley Capital Partners was established as an independent entity, market conditions in venture capital have evolved,” Mitchell Merin, president and chief operating officer of Morgan Stanley Investment Management, said in a statement. “We mutually agreed with the professionals from Venture Partners that the independent business model is the preferred structure for venture capital firms in today’s environment.”