Morgan Stanley raises $4 billion for global infrastructure fund

Posted May 12th 2008 1:53PM by Joseph Lazzaro
Filed under: Morgan Stanley (MS)

Morgan Stanley has raised $4 billion for a fund that will invest in global infrastructure projects, including energy and transportation systems, the company announced Monday.

Morgan Stanley said the $4 billion in equity commitments exceeded the company's initial fund goal by $1.5 billion and "underscores the particular demand for infrastructure investment, and broadly, for alternative assets that generate long-term, stable cashflows."

Shares of Morgan Stanley (NYSE: MS) gained 67 cents to $46.62 on the news on Monday at mid-day.

In a statement, Sadek Wahba, chief investment officer and global head of Morgan Stanley Infrastructure, said the fund has investments exceeding $1 billion in enterprise value to-date.

Infrastructure spending boom

Economist Glen Langan said investment banks, hedge funds and other institutional investors are hoping to take advantage of the global spending boom by emerging market governments and corporations to build infrastructure, including highways/roads, ports, but also electricity, water and telecommunications facilities. Emerging markets are upgrading facilities -- and in some cases building new facilities for the first time -- to meet commercial and social needs as their economies develop.

"You can sense the tactical shift among institutional investors -- housing and mortgage-back securities are out, infrastructure investment is in. The key phrase in their [Morgan Stanley's] announcement today is 'uncorrelated investment returns.' The push is on now in institutional investor circles for stand-alone investments not linked to complex derivatives or even the current U.S. business cycle," Langan said. "It's great to see, for emerging markets, because these markets will expand and develop, increasing incomes and prosperity in these nations."

Further, Langan said he expects investment in developed-world infrastructure to gain momentum as well. "In Europe, the electric grid is at least one generation behind, and in the U.S., the electric grid, water systems and bridge networks need upgrades, among other systems, he said. He added that the U.S.'s public policy landscape stemming from the upcoming 2008 presidential election will help determine the scope of domestic infrastructure investment opportunities available to investors.

Tags: Asia, emerging markets, infrastructure, inthenews, Latin America, Morgan Stanley, MS