Morgan Stanley Alternative Investment Partners and LACERA Announce Close of Managed Private Equity Co-Investment Fund; LACERA Selects Morgan Stanley to Run Its First Private Equity Co-Investment Program

Business Wire, July 24, 2006

LOS ANGELES & NEW YORK -- Los Angeles County Employees Retirement Association (LACERA) and Morgan Stanley Alternative Investment Partners (Morgan Stanley AIP) announced today the closing of a managed private equity co-investment Fund, of which LACERA is the primary limited partner having committed $250 million. Morgan Stanley and senior team members of Morgan Stanley AIP have also committed capital to the Fund.

Following a thorough search process, the LACERA Board of Investments approved the hiring of Morgan Stanley AIP as the discretionary investment manager of LACERA's first private equity co-investment program. The program will focus on growth equity and leveraged buyout transactions, and will target direct participations alongside LACERA's own private equity managers. In its capacity as fund manager, Morgan Stanley AIP will source, select, execute and monitor all such investments on behalf of LACERA.

"We are delighted to be partnering with LACERA in what we hope will be the first of many such programs together," said Cory Pulfrey, Head of Morgan Stanley AIP. "By applying our proven co-investing approach and resources to LACERA's deep set of first-tier General Partner relationships, we believe that we can generate attractive risk-adjusted results."

Both LACERA and Morgan Stanley AIP have significant experience investing in private equity. LACERA's current private equity commitments total $5 billion across 102 active private equity fund manager relationships. Morgan Stanley AIP currently manages $4.65 billion of commitments in portfolios of private equity funds and separately managed accounts, and has 98 active private equity fund manager relationships.

"By leveraging our network of relationships, LACERA and Morgan Stanley can now provide a substantial and responsive co-investment solution to General Partners who require incremental capital to execute transactions," said Lisa Mazzocco, Chief Investment Officer of LACERA. "We believe that this program will deepen relationships with our existing managers and will continue to enhance the contribution made by our private equity program to the overall performance of the LACERA plan."

"We are deeply gratified by the confidence LACERA has placed in us to manage this important initiative," said Stuart Bohart, Morgan Stanley Investment Management's Head of Alternative Investments. "Morgan Stanley AIP is recognized in the industry for its ability to deliver strong results and to craft innovative investment solutions to meet the specific needs of institutional investors. This mandate underscores the strength of our private equity expertise and Morgan Stanley's overall commitment to the alternative investment business."

LACERA

The Los Angeles County Employees Retirement Association (LACERA) administers defined retirement plan benefits for the employees of Los Angeles County and participating agencies. LACERA provides customer service to 144,000 members and over 49,000 benefit recipients. LACERA plan assets are $34.4 billion as of June 30, 2006.

Morgan Stanley

Morgan Stanley (NYSE: MS) is a global financial services firm and a market leader in securities, asset management and credit services. With more than 600 offices in 30 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.

Morgan Stanley Investment Management

The firm's investment management division, with over 400 investment professionals around the world, manages assets in excess of $442 billion and offers asset management services to a diverse client base which includes: governments, institutions, corporations, and individuals.

Morgan Stanley AIP

Morgan Stanley Alternative Investment Partners (Morgan Stanley AIP) is Morgan Stanley's primary portfolio of private equity funds and portfolio of hedge funds manager, and is part of the broader Morgan Stanley Investment Management business. As of June 30, 2006, the Private Markets team of Morgan Stanley AIP oversees more than $4.65 billion in private equity commitments in portfolios of private equity funds and separately managed accounts and is one of the largest fund of private equity funds managers in the world.