Aussie superfund shopping private equity portfolio – exclusive

An Australian superannuation fund is in the market with a private equity portfolio worth at least $300 million, Secondaries Investor has learned.

Commonwealth Superannuation Corporation has brought in advisor Greenhill to help it offload the stakes, according to two sources familiar with the deal.

The make-up of the portfolio is unclear.

Canberra-based CSC invests in managers including Hellman & Friedman, Oaktree Capital Management, One Equity Partners and TA Associates, according to its website.

CSC manages 11 government superannuation schemes, catering for Australian government employees and members of the armed forces, according to its 2016-17 annual report.

It has around A$45 billion ($33.7 billion; €28.7 billion) in total assets under management, 13 percent of which is allocated to alternatives, according to PEI data. CSC’s precise definition of alternatives is unclear.

Australian limited partners have been expected to come to market in 2018 in line with regulatory changes. According to Charles Wan, a principal at advisory firm Atlantic-Pacific Capital, more Australian LPs must now report their management expense ratios, which encompass management fees paid to underlying managers across all asset classes.  

“Since commitments to private equity managers drive up average reported MERs considerably, there has been intense competition and pressure among asset managers to lower MERs for other products such as fixed income. As such, MERs have been a driver of secondaries selling in Australia for some time,” Wan noted.

There have been a number of sizeable deals in market in Asia-Pacific this year, including the sale of $500 million in fund stakes by Asia Alternatives Management and the $1-billion-plus spin-out of Standard Chartered’s private equity business, which is reportedly under way.

According to analysis by Greenhill, Asian secondaries transaction volumes reached a record high of $3.9 billion last year, a 63 percent year-on-year increase. This was driven by a few large $700-million-plus GP-led transactions, most notably Warburg Pincus’s $1.2 billion strip sale, and some sizeable LP portfolio transactions.

CSC did not return requests for comment. Greenhill declined to comment.

– Adam Le contributed to this report.