Morgan Stanley closes first impact fund of funds

The asset manager has raised more than $125m to invest in private equity impact funds, particularly in emerging and frontier markets.

Morgan Stanley Investment Management has raised more than $125 million for its first global impact fund of funds, according to a statement from the firm.

PMF Integro Fund I will invest in private equity funds offering “the potential for compelling financial return while demonstrating positive environmental impact, social impact or both”, the firm said.

The fund was launched in partnership with the Morgan Stanley Institute for Sustainable Investing, will be managed by AIP Private Markets, the private markets solutions team within Morgan Stanley Investment Management.

“Integro provides a compelling solution for our institutional and high net worth clients who are increasingly seeking investment options that target the strong commercial returns that they have come to expect from our team, coupled with demonstrable and measurable social and environmental impact,” John Wolak, Head of AIP Private Markets, said in the statement.

“We view Integro and this initiative as an important component of the broader suite of strategic solutions we are able to offer clients through our comprehensive private markets platform.”

Paul Price, global head of sales for Morgan Stanley Investment Management, commented that through working closely with its clients, Morgan Stanley has “understood their increasing desire to invest in instruments which have an environmental and social impact”.

Integro will target private equity funds with high organic growth that will drive strong financial returns and meaningful positive impact, the firm said. It seeks to provide investors with exposure to a portfolio that is diversified by geography, theme and impact outcomes. The majority of the fund will be invested with managers focusing on emerging and frontier markets.

The belief is that while maximising commercial returns to investors, these investments will increase access to jobs, education and healthcare, along with other “socially beneficial outcomes”, for underserved populations, as well as positively impacting the environment and reducing the effects of climate change.

According to the annual Global Impact Investing Network survey, released last week, private equity investors plan to almost double the capital allocated to impact investing this year, as reported by PEI.

Private equity fund managers, who accounted for 27 percent of the total $113.7 billion of impact assets represented in the survey, plan to up their impact investments by 89 percent for the year from $1.9 billion to $3.7 billion. They also plan to increase the number of impact deals by 14 percent from 822 to 937 transactions this year.