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Morgan Stanley’s new private-markets fund hits $1b

FWR Staff

26 June 2006

Views fund’s success as sign of strong demand for specialized alternatives. Morgan Stanley’s Alternative Investment Partners group has raised $1 billion for its Private Markets Fund III, which is meant to give investors better risk-adjusted returns via global investment in primary funds, co-investments and direct secondary funds.

“The success of Private Markets Fund III clearly demonstrates investors' high demand for expertise in the alternatives space,” says Stuart Bohart, head of alternative investments at Morgan Stanley Investment Management . “Building our alternatives business is a key priority for the Firm and providing our clients market leading, innovative product offerings like this is critical to our strategy.”

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Morgan Stanley AIP head Cory Pulfrey says that most investors in the group’s previous funds have subscribed to the new fund in addition to a number of new limited partners, including insurance companies, endowments, foundations, pension plans, family offices and other high-net-worth investors.”

With a three-pronged strategy that encompasses buyouts, global venture capital and “special situations,” AIP looks at “less efficient” market segments and targets managers with unique skill sets in the U.S., Western Europe and emerging private-equity markets like Japan.

Morgan Stanley AIP expects that Private Markets Fund III will invest approximately one third of its committed capital in a combination of secondary interests and direct co-investments made alongside high quality financial sponsors in addition to investing in private equity funds.”

Morgan Stanley AIP, part of Morgan Stanley Investment Management, is the New York-based investment bank’s primary portfolio of private equity funds and portfolio of hedge funds manager. On 16 June 2006, Morgan Stanley AIP’s private-markets team oversaw about $4.39 billion in private-equity commitments. –FWR

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