Chris Witkowsky

Some public pensions appear to think any sunlight allowed on their private equity decision-making processes would cause irreparable damage to their ability to continue investing in the asset class.

Secondaries pricing has become uncertain, with inflation, supply chain disruptions, geopolitical turmoil and rising interest rates causing public market volatility since the beginning of the year.

The portfolio sale, relatively small compared to the $1bn-plus transactions that hit the market since last year, is expected to get a lot of looks.

Custar joined placement agent and advisory firm M2O to launch its secondaries business in 2017.

The presence of a US public pension system as a lead investor is a reflection of the growing sophistication and desire on the part of some big US public plans to take more direct roles in investment management.

The mid-market-focused boutique is one of several banks and financial advisers thinking about adding secondaries capabilities.

The challenges of selling such a big offering are highlighted by growing uncertainty around secondaries pricing, weakening amid public market volatility, rising inflation and geopolitical shocks from Russia’s invasion of Ukraine.

Portfolios with valuations pegged to 30 September no longer reflect market dynamics, including public market volatility, plunging tech valuations and geopolitical turmoil sparked by Russia’s invasion of Ukraine.

Several recent single-asset secondaries deals have had their valuations set by earlier minority stake sales.

The sale is one of several that hit the market since the second half of 2021, when traditional LP portfolio sales came surging back into the market.