BP pension nears deal to sell portfolio worth as much as $800m

Corporate and public pensions continue to divest from illiquid assets amid persistent overallocation pressure.

The defined benefit pension scheme of one of the world’s largest oil and gas companies is close to offloading a portfolio of private market fund stakes, Secondaries Investor has learned.

BP’s DB pension has been shopping a portfolio around $700 million to $800 million, according to two sources familiar with the matter.

Campbell Lutyens is understood to be the adviser on the deal.

The sale of the portfolio started in the second quarter of this year, according to the two sources. The deal will close imminently with a buyer already engaged in the process, Secondaries Investor understands.

LPs have been shedding illiquid assets due to the denominator effect, with LP-led deals making up 55 percent of total transaction volume in the first half of this year, compared with 49 percent for full year 2022, according to Campbell Lutyens’ H1 2023 Secondary Market Overview.

Compared with other LP sellers, corporate and public pensions became less active after dominating the LP-led market last year. In the first half of this year, such institutions accounted for 30 percent of total transaction volume, compared with 49 percent in full year 2022, according to Campbell Lutyens’ report. Still, they are selectively selling stakes in private market funds as overallocation pressure continues.

UK DB pension schemes have also joined the ranks of LPs offloading fund interests in the past year, although for many, their primary motivation hasn’t been a need for liquidity. Many have wanted to expedite the process of moving their liabilities to insurance companies, as Secondaries Investor has reported.

BP’s pension’s motivation for its sale is unclear.

Recent LP-led deals include CPP Investments’ sale of 20 LP fund interests to Ardian in November, which generated C$2 billion ($1.47 billion, €1.37 billion) in net proceeds. Affiliate title Buyouts (registration required) first reported in August that Ardian had stepped up to buy a funds portfolio from the Canadian pension giant, although it did not take up the full offering. In October, Buyouts also reported that the Dutch pension administrator PGGM was exploring a sale of up to $2 billion of its private equity portfolio.

The two largest LP-led deals in 2023 were from Kaiser Permanente and the New York State Teachers’ Retirement System, both of which shopped $6 billion portfolios. Kaiser’s portfolio sold more than $5 billion, while New York State Teachers’ Retirement System sold about half the offering, Buyouts reported.

According to Campbell Lutyens’ prediction, transaction volume in the secondaries market will reach around $110 billion this year, a 4 percent increase from FY 2022 and nearly 60 percent above the five-year average volume of $70 billion.

A spokesperson for BP did not return a request for comment. Campbell Lutyens declined to comment.