Morgan Stanley raises $1.14 Bn FOF; To Invest in emerging mkts

Morgan Stanley Investment Management (MSIM) has said that its alternative asset arm has raised $1.14 billion in commitments for Morgan Stanley Private Markets Fund IV, a private equity fund of funds. Its strategy is to emphasize less efficient market segments and target managers with differentiated skill sets in the US, Western Europe and emerging private-equity markets. The firm has also recently opened up an office in Hong Kong.

"In today’s environment, distressed – including secondary purchases – and asset-backed strategies are especially attractive," said Tom Dorr, Chief Investment Officer, Private Equity Fund of Funds Team. The new fund, which is an increase of over 15% from the last fund, will make investments in primary funds, co-investments and direct secondaries.

Emerging markets are increasingly becoming attractive for limited partners (LPs). India ranks third in terms of attractiveness among emerging markets, after China and Brazil, said a recent survey by Emerging Markets Private Equity Association and Coller Capital. The survey added that 78% of the LPs with an exposure to emerging markets are now looking to increase their commitments. This is because most LPs believe that emerging market funds will give better returns developed market funds.

Fundraising has been increasingly getting tough as LPs are cutting commitments to the private equity asset class. Many fund managers have delayed their fund closing dates and are even trimming their fund size in order to reach a close.

Currently there are 78 India-focused funds on road in 2009 looking to raise $24 billion, according to data by Prequin. There are about 117 pan-Asia private equity funds - who have India as one of its geographies - on road currently targeting to raise an aggregate capital of $59.2 billion.