Fund III is a 2004 vintage fund with $400 million in original commitments and five active investments. The secondary sale was approved by 100 percent of Fund III’s limited partners. LPs in the fund include the California Public Employees’ Retirement System and the Duke University Endowment, according to Private Equity International’s Research and Analytics division.
“We are pleased to have executed on an innovative transaction that provided Fund III limited partners with the opportunity to either receive liquidity or participate in the extension”, David Freeman, co-founder and partner of FFC, said in the statement.
Morgan Stanley was unavailable for comment at press time.
“[W]e believe [FFC’s portfolio companies] are well positioned to create significant value during the remaining life of fund III”, Jonathan Costello, a senior portfolio manager at Morgan Stanley AIP, said in the statement. “[FFC] is an excellent example of the type of specialist, middle market manager that we seek to invest in”.
The transaction comes following two headline-grabbing fund restructurings in 2012 involving Behrman Capital’s $1.2 billion third fund, which was restructured by The Canada Pension Plan Investment Board, and Willis Stein’s $1.8 billion third fund, restructured by Vision Capital, Landmark Partners and PineBridge Investments.
Morgan Stanley AIP, part of Morgan Stanley Investment Management, focuses on fund investing, secondaries and co-investing across private equity, hedge fund, real estate and multi-asset class strategies. The group recently closed its second Global Secondary Opportunities fund on $770 million, surpassing its $600 million target. The fund focuses on off-market secondary opportunities and emphasises small- and mid-cap buyouts and special situations funds.
Greenwich, Connecticut-based FFC has invested more than $900 million in 36 healthcare services and infrastructure companies since Freeman and former CS First Boston director Carlos Ferrer founded the firm in 1995. FFC has raised three funds and its fourth fund reportedly launched earlier this year.