US$1.5b aim for Morgan Stanley Asia fund
Morgan Stanley Private Equity (MSPE), an investment arm of the Wall Street bank, has started raising a new pan-Asian fund dedicated to deal-making in the world's fastest growing economic region - with a target size of around US$1.5 billion.
If successful, it would become the fourth Asia-focused private equity fund at MSPE, which has a two-decade track record of investing in the region.
'It [fund-raising] is still in the early stages ... China, of course, remains the focus for the new fund to invest,' a person familiar with the matter told the South China Morning Post. They declined to be identified as the fund-raising is confidential.
A spokeswoman for Morgan Stanley in Hong Kong declined to comment.
MSPE was one of the early birds that came to Asia to invest. In recent years, the fund has put more resources - including hiring more dealmakers and allocating more capital - into China, already the world's No2 economy.
MSPE claims to have invested around US$2.4 billion in Asia. More recently, it announced its Asia fund would invest US$300 million in China's Tianhe Chemicals Group. The specialty chemicals maker plans to expand into the US and European markets with the fund's help.
People in the industry say more than 10 investment firms - including Washington-based Carlyle Group, US buyout fund giant TPG Capital and Bain Capital - are in the market to raise money for new Asia-focused funds. Many of them aim to raise capital of between US$1 billion and US$2 billion.
But weak market sentiment amid the worsening debt crisis in Europe and slow economic recovery in the United States has meant some private equity firms have had difficulty securing enough capital for their new funds this year.
'It really depends on your track record,' said an industry veteran. 'Because there are already so many existing and new private equity funds that all say they are Asia specialists, LPs [limited partners] are certainly becoming more picky or even suspicious to some extent.'
Private-equity-fund managers are known as general partners (GPs) and the institutional investors in the funds are known as LPs. The LPs give their money to GPs to manage in the hope they can get higher returns - sometimes three or four times the initial amount - within a few years, much higher than investments in traditional asset classes.
Other well-known Chinese companies that have been invested in by MSPE in the past few years include Sihuan Pharmaceutical and Shanshui Cement Group, the mainland's No3 cement producer.
In Asia, the fund has also shown growing interest in South Korea. It invested in Jeonju Paper, its largest manufacturer of newsprint and specialised paper and the largest exporter of newsprint in Asia.