Two years after eliminating its private-equity department to avoid conflicts with clients, Morgan Stanley is back in the business.

The company said Tuesday it is relaunching a private-equity unit as part of Chief Executive John Mack's push to add higher-return, higher-risk products to its investment-management businesses. The unit, which will invest in leveraged buyouts and other debt-financed acquisitions of companies, will be led by Morgan Stanley veteran Alan Jones, 45, and Stephen Trevor, 43, who has been with Goldman Sachs Group Inc. since 1992.

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