Connecticut pulls potential secondaries sale due to weak pricing

The $50bn US pension system backed off a planned secondaries sale after prices came in too low.

Connecticut Retirement Plans and Trust Funds wants to create a “customised solution” with an outside partner that would manage its legacy private equity assets.

Connecticut, like other LPs, had considered a secondaries sale for liquidity while also reducing the administrative burden of its legacy portfolio. Weak pricing caused Connecticut to pull back on its planned sale, according to principal investment officer Mark Evans, who discussed the sale at the system’s 10 January board meeting.

Affiliate title Buyouts listened to a broadcast of the meeting.

The system could continue another sale in the future, Evans said. Connecticut hired Mozaic Capital Advisors in 2022 as its secondaries adviser. Buyouts previously reported Connecticut was shopping a portfolio valued between $400 million and $500 million.

According to Evans, 20 percent of the system’s legacy funds comprised roughly 80 percent of the value of the shopped portfolio.

Mozaic found that many of those assets would face a 25 percent discount even while holding unrealised value, Evans said.

“These funds might have an opportunity to appreciate in value,” Evans said.

The customised third-party agreement would help relieve the administrative burden from the legacy portfolio. It would also give the system flexibility to act as a secondaries buyer either of LP stakes or in continuation funds, Evans said.

The system will have further details on the customised arrangement at its February meeting, he said.