Morgan Stanley Alternative Investment Partners, a division of the New York bank’s asset-management business, is seeking as much as $750 million for a fund that will purchase existing private-equity stakes, said a person with knowledge of the matter.
Morgan Stanley Global Secondary Opportunities Fund II LP will buy secondary stakes in special situation funds, as well as small- and mid-cap buyout funds, according to the person, who asked not to be identified because the information isn’t public. Special situation funds seek to profit from investments in companies undergoing corporate events such as asset sales, spinoffs and shareholder lawsuits.
So-called secondary buyers, including firms such as Credit Suisse Group AG and Coller Capital Ltd., are looking to take advantage of an unprecedented amount of private-equity assets being offered from sellers including banks and pension plans. Credit Suisse, based in Zurich, said last month that it raised $2.9 billion for its fifth secondary fund, and London-based Coller is seeking to collect $5 billion for a pool that will purchase existing stakes.
Matt Burkhard, a spokesman for Morgan Stanley, declined to comment on the fundraising.
The new fund, which has a target of $600 million and a limit of $750 million, will allocate about a quarter of its capital to emerging markets, the person said. That compares with about 20 percent for the previous pool, which raised $584.5 million in 2010, the person said. The allocation will be balanced between Asian, Latin American and Eastern European countries.
Emerging markets funds make up an increasing share of available secondary stakes, with Asia assets “slowly becoming a more noticeable portion of the market,” according to a March presentation by Cogent Partners, a New York-based advisory firm. Capital raising for Asia Funds peaked at $65.1 billion in 2008, according to researcher Preqin Ltd. Last year, such funds accounted for 2 percent of secondary-market supply, Cogent said.
Over the past decade, Morgan Stanley Alternative Investment Partners’ secondary funds have generated a 25 percent net internal rate of return, the person said.