Morgan Stanley Direct Lending Fund

Morgan Stanley Direct Lending Fund is a non-diversified, externally managed specialty finance company focused on lending to middle-market companies in the U.S. The company operates as a Business Development Company (BDC) under the Investment Company Act of 1940 and intends to qualify annually as a Regulated Investment Company (RIC) for U.S. federal income tax purposes. As a non-diversified investment company, it is not limited by the 1940 Act in the proportion of assets invested in a single issuer. The fund is externally managed by an indirect, wholly owned subsidiary of Morgan Stanley. Its investment objective is to achieve attractive risk-adjusted returns through current income and, to a lesser extent, capital appreciation. This is primarily accomplished by investing in directly originated senior secured term loans issued by U.S. middle-market companies where private equity sponsors hold a controlling equity stake. Middle-market companies are generally defined as those generating annual earnings before interest, taxes, depreciation, and amortization (EBITDA) in the range of approximately $15 million to $200 million, though not all portfolio companies will meet this specific criterion. The fund primarily invests in directly originated senior secured term loans, including first lien senior secured term loans (which encompass unitranche loans) and second lien senior secured term loans. The remaining investments are expected to be in higher-yielding assets such as mezzanine debt, unsecured debt, equity investments, and other opportunistic asset purchases. These middle-market senior loans are typically issued in the context of leveraged buyouts (LBOs), acquisitions, debt refinancings, recapitalizations, and similar transactions. Debt investments generally have a stated term of five to eight years and typically bear interest at a floating rate, usually determined based on a benchmark such as the Secured Overnight Financing Rate (SOFR).