Morgan Stanley Nails First Close on $2.5 Billion –

Champagne was flowing at Morgan Stanley Capital Partners, which on Dec. 18 saw a first close of $2.5 billion on its fourth buyout fund, according to a source at the firm. General partners at the private equity group of the investment bank declined comment for this article.

The fund, launched with a target of $2 billion at the beginning of 1998, should reach $3 billion sometime during the first quarter of this year, the source said.

The closing came after a longer-than-expected fund raising effort. At the time of its lauch, limited partners voiced concerns over personnel turnover and investment strategies (BUYOUTS Jan. 12, 1998, p. 5).

The source said foreign capital makes up about 15% of the new fund, including commitments from Kuwait Investment Authority and Government of Singapore Investment Corp. An additional 15% of equity came from Morgan Stanley employees; 15% came from other wealthy individuals; and 45% came from public and private pensions.

The source declined to provide additional information about the close.

At the time of the launching, a source at Morgan Stanley said Fund IV would invest in financial services, health care and telecommunications, and would commit at least 30% of its capital overseas.

The source said a planned Morgan Stanley fund-of-funds should be launched in the first quarter of this year. He said the buyout firm had not yet selected a manager for the fund. The fund-of-funds has a target of about $500 million (BUYOUTS Oct. 26, 1998, p. 3). It will allocate as much as 30% to Morgan Stanley-sponsored private equity vehicles.