Ardian to buy chunk of CPPIB portfolio, pension’s co-invest sale gets pulled

Secondaries professionals stressed in recent weeks that pricing has improved since late last year and is expected to continue to strengthen.

A large secondaries sale run by Canada Pension Plan Investment Board appears to be halfway to completion.

The process involved two parallel tracks: a traditional LP portfolio sale, run by Jefferies, and a sale of a portfolio of co-investments, run by Evercore.

Ardian is the buyer of the funds portfolio, though the firm is not gobbling up the full offering, which was valued at around $2 billion, sources said. Instead, Ardian was able to pick and choose what it wanted out of the pool and put together its own portfolio, sources told affiliate title Buyouts.

The sale, if closed today, would be at around a double-digit discount, one of the sources said. It’s not clear if CPPIB will continue to try and sell the rest of the offering.

Meanwhile, CPPIB chose to pull the co-investment sale based on pricing coming in too low, three sources said. It also may be the case that CPPIB wanted the full portfolio to sell, rather than allowing buyers to cherry-pick their favourites, one source said.

Sales of co-investments have become more common in secondaries transactions. In a recent example, Apollo’s S3 group took the lead investor role in a sale of around 50 co-investments out of older GoldPoint Partners co-investment funds, Buyouts reported. GoldPoint is part of a triumvirate of firms that form Apogem Capital, including PA Capital and Madison Capital.

Overall, LP sales have remained somewhat muted because of a gap between buyer and seller expectations. However, secondaries professionals have stressed in recent weeks that pricing has improved since late last year, and the expectation is that it will continue to strengthen.

“We expect pricing for buyout funds to improve moderately (which was already partially observed in Q2 vs Q1 2023) as the valuation gap between public and private markets closes, and falling inflation leads to an easing of monetary policy,” according to a halfway secondary volume report from Greenhill & Co.

Pricing on LP portfolios hovered at a medium-high bid of 80 percent across all strategies, similar to last year, Greenhill said. Buyout pricing slipped slightly in the first half to 83 percent of NAV, from 84 percent last year, the report said. LP sales accounted for around $27 billion of total first-half volume of $44 billion, Greenhill said.

Some systems have tested market pricing for their fund stakes and pulled back when bids came in too low. That was the case this year for Michigan’s state pension, which eyed a sale of more than $1 billion of its private equity portfolio, but pulled the sale after bids came in, Buyouts previously reported.

CPPIB, which managed C$575 billion as of 30 June, is no stranger to secondaries sales. The system was shopping a $2 billion funds portfolio early last year with Evercore, Buyouts reported. It is not clear if that process closed.

Ardian has also worked with the system in the past. The firm, which is targeting $25 billion for its ninth secondaries fund and recently held a close on around $20 billion, was lead investor on the acquisition of a roughly $1.2 billion portfolio in the early months of 2020. Lexington Partners was also a buyer on that deal. The portfolio included funds from CVC Capital, Blackstone Group and Apollo Global Management, Buyouts previously reported.