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Alaska eyes potential secondaries sale

The $81bn sovereign wealth fund is considering hiring an adviser to feel out pricing in the secondaries market, CIO Marcus Frampton said on Tuesday.

Alaska Permanent Fund Corporation, the US state’s $81 billion sovereign wealth fund, is mulling a secondaries sale amid an overallocation to private equity.

The fund is considering hiring a broker to “look at a secondary sale later this year”, said chief investment officer Marcus Frampton at Tuesday’s meeting of the state investment committee, while emphasising that any sale would be opportunistic in nature.

“We don’t want to be selling from a position of weakness,” said Frampton.

Secondaries Investor reported in July 2020 that Alaska had sold $1 billion of infrastructure stakes to Strategic Partners, a deal Blackstone chief operating officer Jon Gray described as the “largest ever” in infrastructure secondaries.

It also brought private equity stakes to market though opted not to sell due to unfavourable pricing, Frampton said.

The sovereign wealth fund sold two $750 million private equity portfolios to Ardian in 2017 and 2018, respectively, Secondaries Investor reported.

Alaska currently deploys $1.6 billion a year. Fund commitments make up about three-quarters of that amount, with the rest in co-investments. It is overweight in private equity by 3 percent and bumped its allocation to 16 percent from 15 percent on 1 July.

Due to the hot IPO market, about a quarter of Alaska’s private equity exposure is listed, either through private funds or held directly. Were those positions to be liquidated, the private markets allocation could find itself underweight, Frampton said.

The pension will switch to reviewing its investment pace once a quarter rather than once a year, he added.

Alaska’s private equity portfolio for the fiscal year returned 65 percent over a benchmark of 54 percent. This drove the returns of the fund overall, which outperformed its benchmark by 1.29 percent, or $1.1 billion.

Pricing in secondaries has returned to pre-covid levels. The average high bid across all strategies sat at 92 percent of NAV at the end of the first half of 2021, the highest level since 2018, according to Greenhill’s most recent mid-year report.