Paul Ghaffari, one of the co-founders of $5.5bn (€4.2bn) hedge fund FrontPoint Partners which was bought by Morgan Stanley a month ago, is preparing to launch an emerging markets hedge fund during the first quarter of 2007.

A source familiar with the launch said Ghaffari's new firm will make investments in global emerging markets. Ghaffari is currently raising assets for the fund, which the source said is expected to launch at between $50m and $100m.