Goldman, Deutsche buy PE stakes from PSERS – updated

The Pennsylvania Public School Employees’ Retirement System has sold 20 private equity fund stakes valued at roughly $2bn.

The Pennsylvania Public School Employees’ Retirement System (PSERS) has sold 20 private equity fund stakes with a net asset value (NAV) of $2 billion, according to a statement from the pension.

The stakes were sold in three different portfolio sales: Goldman Sachs Asset Management (GSAM) purchased two of the fund interests, valued at roughly $375 million, and DB Secondary Opportunities – the investment arm of Deutsche Bank – bought one fund stake with a NAV of $135 million.

DB was unavailable to comment by press time and GSAM declined to comment.

Ardian was also involved, purchasing 17 of the fund interests that were valued at about $1.5 billion as of 30 June 2014, according to the PSERS statement. Ardian however estimates the NAV is $1.75 billion, including unfunded commitments, a spokesperson from PSERS said. Most of the positions Ardian purchased were in US-based large-cap and mid-market funds.

The 20 fund positions had performed positively in PSERS’ portfolio and consist of a mix of older and newer vintage years, the statement disclosed. Together the funds earned a earned a net $658 million return on the portfolio, reflecting a net internal rate of return of 4.5 percent since inception.

PSERS hired Cogent Partners to manage the auction process.

The $52 billion pension has decided to sell non-strategic private equity partnerships to reduce its private equity allocation to 15 percent from 20 percent.

“PSERS is endeavouring to reduce its exposure to private equity to 15 percent of the fund’s size, and the depth of the secondary market makes possible a large asset sale that will bring us closer to our long-term target,” PSERS chief investment officer James Grossman said.

The transactions with GSAM and DB closed on 31 December 2014 and lowered PSERS’ allocation to 16.5 percent. The pension’s total unfunded commitments were also reduced to approximately $300 million.

The deal with Ardian is expected to close during the first quarter, after which PSERS anticipates reaching its long-term target allocation over the next couple of years, according to the statement.

This story has been updated to reflect the fact that a NAV of $1.5 billion excludes unfunded commitments, while $1.75 billion includes unfunded commitments.