Morgan Stanley Alternative Investment Partners (AIP) has raised $516m for a new fund- the AIP Hedge Fund- that will focus on hedge fund secondaries and co-investments.

The capital for the Riverview Strategic Opportunities Fund III (SOF III) was raised from private and public pensions, corporations, foundations and family offices, and HNWIs.

AIP hedge funds team CIO and head Mark van der Zwan said: “We are pleased investors continue to see promise in our fund’s differentiated approach as hedge funds look to alleviate the constraints they face in the market and seek opportunities in the liquidity gap between traditional hedge fund and private equity investments.

“Our experienced team is well positioned to deliver consistency in expertise and execution. We are confident that the Fund will benefit from access to AIP’s strong global network of hedge fund relationships, deep proprietary research and rigorous due diligence process.”

SOF III is the third strategic opportunities fund launched by Morgan Stanley. The investment bank launched the first fund in this series in 2014.

“Consistent with SOF I and SOF II, SOF III aims to solve recent liquidity pressure on hedge funds by purchasing hedge fund secondaries and pursuing co-investment partnerships with managers on medium-term investments,” the bank stated.

The AIP hedge fund solutions unit focuses on direct fund investments, secondary investments as well as co-investments in hedge fund strategies. The business, set up in 2000, managed around $23bn in assets at the end of March 2018.