Morgan Stanley was one of the first major Wall Street institutions to financially support Market Financial Solutions Ltd., a British private credit company that eventually collapsed owing $2.4 billion to creditors, according to documents reviewed by Reuters.
The U.S. investment bank provided early financial support to MFS founder Paresh Raja, a former drinks store owner who had been building out his UK mortgage lending business. In November 2021, Morgan Stanley purchased £50 million — approximately $66 million — in what were described as “Class A loan notes” from a company called Earthave Bridging, a business controlled by Raja that channeled funds into MFS. That transaction was documented in a loan filing with UK Companies House. According to Earthave’s 2021 and 2024 financial accounts, the company used the proceeds to purchase MFS mortgages and later repaid its investors.
This connection between Morgan Stanley and Raja’s extensive business network is being reported publicly for the first time. It preceded a series of larger deals with major financial institutions including HSBC, Barclays, and Wells Fargo. The eventual collapse of MFS has alarmed financial regulators, drawing attention to how much exposure mainstream banks may have to the private credit sector — a loosely regulated market now valued at more than $3 trillion.
Morgan Stanley declined to provide a comment for this story. Filings show that its loan to Earthave was ultimately repaid with interest, while other banks that later backed the Raja-linked group suffered significant losses.
The 2021 Morgan Stanley transaction represented the earliest publicly documented connection between Raja, MFS, and Wall Street. It occurred at the beginning of a worldwide surge of institutional investment into private credit, involving entities ranging from insurance companies to smaller public pension funds.
MFS went under in February, leaving £1.8 billion — roughly $2.4 billion — in unpaid debts to creditors, according to the firm’s administrators, AlixPartners. Court filings reviewed by Reuters indicate that some creditors have accused Raja of misappropriating company funds. A judge’s ruling issued in March noted that Raja had apparently since relocated to Dubai.
AlixPartners declined to comment. A representative for Raja, Salamander Davoudi of Tancredi Intelligent Communication, also declined to comment.
MFS had specialized in bridging loans and buy-to-let mortgages for wealthy homebuyers in the United Kingdom. The company was considered a prime example of the type of private credit firm that thrived after post-financial crisis regulations restricted risk-taking by large traditional lenders.
Major banks gradually increased their exposure to the lightly regulated private credit sector, which expanded to roughly $3.1 trillion before a wave of defaults and insolvencies led some investors to withdraw their money.
Britain’s chief insolvency judge stated in a late February ruling that there were “serious and unresolved questions regarding the management and governance” of MFS, noting that multiple large financial institutions had become creditors of the failed firm.
A Reuters review of filings from 78 companies controlled by Raja showed that he had been arranging deals with domestic and regional banks to funnel money into MFS since at least 2015. In 2025, companies under Raja’s control raised hundreds of millions of pounds for MFS from global banks. Among them, Wells Fargo invested £142 million in October of last year, according to insolvency filings. Wells Fargo declined to comment.
Britain’s Financial Conduct Authority launched a formal investigation into MFS in March. The country’s Financial Reporting Council separately announced on June 11 that it had opened an inquiry into a group of auditors connected to MFS and related companies. The Financial Reporting Council declined to comment, and the Financial Conduct Authority did not immediately respond to a request for comment.
