ADIA used secondaries sales to focus on ‘preferred sectors and managers’

The $649bn SWF was 'proactive in monitoring and managing' its existing portfolio last year, including via the secondaries market, according to its latest annual report.

Abu Dhabi Investment Authority, the world’s sixth-largest investor in private equity according to affiliate title Private Equity International‘s 2022 Global Investor 100 ranking, has confirmed it tapped the secondaries market last year for portfolio management reasons.

The $649 billion sovereign wealth fund used secondaries sales to “concentrate the portfolio on preferred sectors and managers”, it said in its latest annual report, published Thursday.

Its private equity department “continued to be proactive in monitoring and managing its existing portfolio”, including via the use of secondaries, ADIA noted, without disclosing further details.

The disclosure comes after ADIA warned last year that the rise of continuation funds was creating more competition for assets in the private equity market.

LPs’ plans to engage with the secondaries market – in terms of sales only – increased this year, according to PEI‘s LP Perspectives 2022 survey: 15 percent said they would only sell this year, compared with 7 percent who said they would only sell the previous year.

LP portfolio sales accounted for 49 percent of the $53 billion in deal volume in the first half of this year – a significant jump from the 37 percent recorded in the first half of last year, according to data from Evercore.

ADIA also disclosed that it had increased its allocation to private equity to between 7 and 12 percent. This follows the investor’s prior annual range being raised to between 5 percent and 10 percent in its annual report last year.

Private equity is now the SWF’s biggest asset class by targeted exposure.

Within private equity, the investor will continue its focus on healthcare and technology exposure – particularly enterprise software, which has been “mission critical” during the pandemic, it noted.