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Credit Suisse collects $2.9bn for secondaries

The bank’s Strategic Partners group has closed its fifth secondaries fund at a time of intense activity on the market from banks and public pensions selling chunks of their private equity holdings.

Credit Suisse’s secondary team has captured almost $3 billion for its fifth fund, a haul of fresh capital that comes at the beginning of what could be the busiest-ever year for the growing market.

Credit Suisse Strategic Partners V will focus on buying stakes in buyout, real estate and venture capital funds. The team started investing Fund V in the second half of 2011 and has already closed or committed on about $500 million to more than 170 underlying funds in more than 30 deals, Credit Suisse said in a statement.

The Strategic Partners team is headed by Stephen Can, who launched the business in 2000. Since its formation, the firm has raised more than $11 billion, completed more than 600 deals and acquired more than 1,400 LP stakes. The bank’s team has 24 secondary professionals.

Fund V includes more than $87 million from Credit Suisse and the Strategic Partner team.

Credit Suisse hits the market with its new fund at the beginning of what has been predicted to be potentially the busiest ever year on the secondary market.

Estimates put last year’s deal volume total at around $24 billion or $25 billion, and many predict this year could break through the $30 billion deal volume barrier. Secondary deal activity, of course, depends on the performance of the markets in general; as was the case last year, intense volatility in global markets could discourage groups from selling.

However, the market will be flooded with assets from financial institutions in the US and Europe, which have been divesting their private equity portfolios because of regulations restricting their exposure to the asset class. Public pension systems in the US also will continue to use the secondary market to pare down their portfolios, cutting the number of relationships and sticking only with the best performing fund.

Already, some large portfolios have been floated on the market by various sellers, including New York City’s pension system. The system is selling up to $750 million of its private equity portfolio in a process run by UBS, and could ultimately offer $2 billion of its private equity programme.

Bidding on the New York City process has already closed and the system is considering the offers it has received, according to two people with knowledge of the process.

The Government of Singapore Investment Corporation is also selling a chunk of its private equity portfolio in its first-ever major offering. The sovereign wealth fund, which wants to sell up to $750 million worth of private equity, also is using UBS on the sale. GIC has an older portfolio and is looking to get rid of managers to which it will not re-up, according to one person with knowledge of the situation.

Harvard also is out in the market, using both Cogent Partners and UBS to sell pieces of its portfolio.

The news about the Strategic Partners fundraise comes shortly after the bank reported overall losses of CHF 637 million (€527 million; $694 million) in the fourth quarter.

The bank’s asset management group reported a decline in net revenues of CHF 455 million in the fourth quarter, down 26 percent from the fourth quarter of 2010.

The declines were due in part to a large decrease in investment –related gains in the asset management group, which came in at CHF 6 million in the fourth quarter, compared to gains of CHF 101 million during the same time period last year. The group had decreases in carried interest from realised private equity gains, but also had increases from private equity placements and real estate transaction fees, the bank said in the earnings report.

“Our performance for the fourth quarter 2011 was disappointing,” said Brady Dougan, Credit Suisse’s chief executive officer. “It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements.”