Morgan Stanley closes $4bn infrastructure fund

Morgan Stanley Infrastructure Partners has closed its latest infrastructure fund on $4 billion (€2.6 billion) above its initial target of $2.5 billion.

Montreal Gateway Terminals: 80% Morgan Stanley-owned

Sadek Wahba, chief investment officer and global head of Morgan Stanley Infrastructure, said: “We have the ability to invest leveraging the global network of the bank. But as part of Morgan Stanley Asset Management we are separate from the investment banking arm.” He said the separation allowed his business to avoid conflicts of interest through Chinese walls, while providing proprietary dealflow. “I like to think we have the best of both worlds.” 

Morgan Stanley invested $400 million or 10 percent of the fund. More than 100 Morgan Stanley employees invested including all the eligible members of the infrastructure fund and various eligible employees of the bank totaling several million dollars. Pension funds, insurance companies and high net worth individuals also invested.

The captive fund is based in New York, London, Hong Kong and Beijing.

Wahba’s team is targeting to invest approximately 40 percent in both Europe and the US, and the remaining 20 percent in Asia, although it may invest up to 25 percent in that continent. “There is an absolute realisation in China and India that investing in infrastructure has an overall impact on economic growth. Both countries realise they need to make major economic investments in infrastructure so the demands are huge.”

He said: “I don’t think there are issues [with China and India] except the continued improvement in the regulatory market. It takes time to implement a clear regulatory system. In the US some states have this and other states don’t.” He said Australia and the UK have developed one of the most significant environments for public private partnerships worldwide, while other countries were focusing on developing the environment for private infrastructure.

The fund has made investments of more than $1 billion, which have already achieved higher than expected returns.

In December 2006 it signed a 99-year concession agreement in Chicago Loop Parking, the largest underground parking system in the US, through a public private partnership with Chicago city. 

In March 2007 it acquired 80 percent of Montreal Gateway Terminals, a Montreal port operator, from TUI, a German tourism and shipping company.  In February 2008 it took a minority stake in SAVE, which manages the Italian airports of Venice and Treviso.