Shares of Dell (DELL) may be stuck in neutral, but MSD Capital, the investment firm that manages Michael Dell’s personal fortune, is moving at full speed. At a time when raising new money has been brutally difficult, Fortune has learned that the $12 billion MSD will soon close its first-ever fund that raised money from outside investors. Its new MSD European Opportunity Fund, dedicated to distressed investing opportunities in Europe, exceeded its $500 million target and is among the largest new capital raises this year, on par with funds raised by John Paulson and Alden Global Capital. The fund reached its target four months early. “In this environment, $500 million is a great launch,” says Tanya Beder, chairman of risk-management firm SBCC Group. And most distressed funds are stagnant, says Ken Heinz, president of Hedge Fund Research; only $9 million of the $19 billion inflow during the third quarter went into pure distressed funds.

There are a few reasons for the success of this under-the-radar firm, and one is the Europe investment team, led by Jonathan Esfandi. Since Esfandi started in 2006 as manager of an MSD portfolio, he’s generated an internal rate of return of more than 20%. Already the European Opportunity Fund is up about 15% since its February inception; that compares with a 5.6% return (net of fees) for the Dow Jones Credit Suisse Hedge Fund index of distressed funds.

“It’s very interesting to see how they are evolving,” says Emma Sugarman, head of Capital Introduction at BNP Paribas Prime Brokerage. “It’s rare to find families that run their own strategies in-house and allow co-investment.”

Overall, the 12-year-old MSD has a great track record. The firm picked up the remnants of IndyMac (now OneWest Bank) as part of a group that included J.C. Flowers and Paulson & Co. MSD also co-created TimberStar Southwest to buy forestland from International Paper (IP) for about $1.2 billion in 2006, selling it for $1.7 billion in 2008.

So why seek outside money? MSD wouldn’t comment, but Beder says the decision was probably motivated by a desire to boost employee pay. It also lets the family diversify without having to allocate capital to an outside team. Then, of course, there is the opportunity to make major investments in Europe, where real estate has slumped, overleveraged businesses are struggling, and the government is forcing banks to divest assets. If only Dell Inc. could harness that energy.