What is your outlook on selling stakes in the secondaries market?
I think the market continues to offer attractive prices for limited partners looking to sell stakes. LPs (ourselves included) have increasingly used the secondaries market to rebalance their portfolio or reallocate to across strategies. Secondaries have become a very useful portfolio construction tool. This trend should only increase in the future.
Have you participated in any fund restructurings as a seller? If so, what attracted you to making the decision you did?
We have participated in one fund restructuring to date. We were a seller, and based our decision on both the strength of the underlying portfolio company investments and our confidence in the GP’s ability to successfully manage the fund going forward.
Why has the SBA lowered its secondaries target allocation to 10 percent from 12.5 percent?
The decision to lower the target was based on a view that other strategies in our portfolio offered a higher expected return at this point in the cycle. A 10 percent target still represents an increase from the 6 percent allocation we have today.
How do you plan to deploy your $675 million in secondaries over the next three years?
The $675 million represents re-ups with existing managers in our portfolio. At this time we do not expect to add additional secondaries managers to our portfolio.