Morgan Stanley raises $500m fund of funds

Morgan Stanley Alternative Investment Partners’ second vehicle will make commitments to US and European buyout, global venture and special situation partnerships.

Financial services giant Morgan Stanley today announced that Morgan Stanley Alternative Investment Partners (AIP) has raised $500 million (€379 million) for its second private equity fund of funds.

According to Morgan Stanley AIP co-head Cory Pulfrey, the final number represents the firm’s hard cap, surpassing the $350 million goal set when fundraising began in the first quarter of 2004.

Morgan Stanley AIP Global Diversified Fund, also known as Private Markets Fund II, focuses on four strategies: US buyouts, European buyouts, global venture capital and special situations.

In addition to investing in private equity funds, the new fund will invest approximately 35 percent of its committed capital in a combination of secondary interests and direct co-investments made alongside private equity managers and financial sponsors.

Pulfrey said the fund will invest between 50 percent and 60 percent of its capital in buyouts, 20 percent to 30 percent in venture, and the rest in special situations. The fund will have a “heavy international flavour”, with between 55 percent and 65 percent of commitments outside of the US.

However, he added that the majority of venture-dedicated money will remain in the US, although the firm will be exploring opportunities in Israel, Western Europe and Asia.

Morgan Stanley AIP is Morgan Stanley’s primary fund of private equity funds and fund of hedge funds manager. The Private Markets team of Morgan Stanley AIP manages more than $3 billion in private equity commitments in funds of private equity funds and separately managed accounts.