Morgan Stanley caps fifth FoF at $1.3bn

Morgan Stanley Private Markets Fund V includes $580m for separate accounts, and will invest in primary funds, co-investments and secondaries.

Morgan Stanley Alternative Investment Partners has closed its fifth fund of funds on $1.3 billion, north of its $1.25 billion target.

The fund, which was in market for 18 months, will invest roughly 60 percent of the capital in primary investments, 25 percent in co-investments and 15 percent in secondaries. The allocation strategy mirrors that of Morgan Stanley’s fourth fund of funds, which collected $1.14 billion in 2009. Of the $1.3 billion raised for Fund V, $580 million will be used for separate accounts.

“Over the course of this fund cycle we saw more demand from large LPs wanting to have a separate account format as opposed to being in a commingled fund of funds than we have seen historically,” managing director at Morgan Stanley Jamey Sperans told Private Equity International.

“Given the [fundraising] environment and given the enhanced scrutiny that all of us fund of funds providers have found ourselves under, we’re pretty pleased with the result,” Sperans said.

Morgan Stanley did not use a placement agent for the fundraise.

Limited partners in the fund include the Iceland State Employees’ Pension Fund and the UK’s Northumberland County Council Pension fund, according to data provider Private Equity Connect.

Morgan Stanley Alternative Investment Partners, which houses the bank’s fund of funds, focuses on “less efficient market segments” and targets managers in the US, Western Europe and emerging markets. The group manages portfolios of hedge funds, private equity funds and real estate funds for institutions and high net worth individuals.