CPPIB shops $1bn-plus portfolio

Private equity secondaries activity is starting to ramp up after a months-long pause in the pandemic downturn, with GP-led deals leading the way.

Traditional limited partner portfolio sales are not expected to return to the market in a meaningful way until later in the year. This is because diverse fund portfolios, representing sometimes hundreds of underlying businesses, are tough to value in the uncertain environment.

Still, some portfolios with high-quality funds are able to trade in today’s market. This is the case with Canada Pension Plan Investment Board, which is shopping a large portfolio of private equity stakes that could total as much as $2 billion, two people told sister title Buyouts.

CPPIB did not respond to a request for comment to Buyouts on Wednesday. PJT Park Hill is understood to be working as secondaries adviser on the transaction.

The Canadian pension giant has been a prolific seller of private equity. The system was notable as closing perhaps the last big LP portfolio sale before markets shut down in the pandemic. Ardian and Lexington Partners were buyers on a portfolio sale valued at about $1.2 billion that closed on 31 March, Buyouts previously reported.

That prior portfolio contained funds from CVC Capital Partners, Blackstone Group and Apollo Global Management, Buyouts reported.

The latest portfolio contains what sources described as high-quality funds.

CPPIB’s sale hits the market shortly after the system lost its head of secondaries, Michael Woolhouse, who joined TPG on Monday. Woolhouse will lead the creation of a secondaries group with the firm, TPG said in a statement.

While most traditional LP portfolio sales activity is not expected to make a significant comeback until later this year, certain portfolios containing high-quality funds are trading at reasonable prices, sources said.

As well, some sellers may want to bring portfolios to market now before the anticipated flood of activity that is expected from September.

A secondaries buyer said: “There is an expectation of significant pick-up at the end of the year. Sellers and advisors are very aware that, even though there have been new funds readied and meaningful dry powder available, there is a limit in terms of what the universe of buyers can absorb in terms of transaction volume in a given quarter.”

Other large deals in market during the downturn include Ottawa Avenue Private Capital, an affiliate of the DeVos family office. HarbourVest Partners was lead buyer on the up to $2 billion deal in which Ottawa Avenue sold private equity stakes, Buyouts reported. The Ottawa Avenue portfolio also included what has been characterised as stakes in high-quality funds.

Also, Latin America-focused Southern Cross Group completed a restructuring on an older fund in a deal led by ICG.

– This story was updated to reflect the accurate composition of the portfolio for sale.