HarbourVest acquires $1.2bn Cathay Life portfolio

Cathay Life and some of its fellow Taiwanese insurers have been pulling back from private markets due to current and impending regulatory capital requirements.

Cathay Life, historically one of Asia’s most active LPs, is offloading a portfolio of private equity stakes to HarbourVest Partners.

The insurer has agreed to sell about $1.2 billion worth of stakes in 21 private funds to the Boston-headquartered firm, according to a 7 March filing. The transaction includes a stake in Blackstone Capital Partners VIII, the filing said.

Cathay Life is expected to make a $270 million profit from the transaction, it noted, adding that the transaction amount is subject to change.

HarbourVest declined to comment. Cathay Life had not responded by press time.

Over the past decade, Taiwanese insurers have represented a major source of capital for international private equity managers: according to data from affiliate title Private Equity International, these institutions have pumped at least $17.8 billion into the asset class since 2015.

However, Cathay and some of its peers have been pulling back from private markets due to current and impending regulatory capital requirements, PEI reported last week.

This latest sale is Cathay Life’s second in under 18 months. In December 2022, the insurer sold at least $300 million worth of interests in eight private credit funds – including Ares Capital Europe IV – to a consortium that included Apollo S3 ManagementColler Capital and StepStone, per a filing at the time.

KGI Life – formerly China Life Taiwan – sold $272 million of private equity fund stakes in May last year to a consortium of buyers that also included HarbourVest and Sturbridge, according to filings. The transaction involved stakes in 15 private equity funds, including Ardian Buyout Fund VII.

That deal followed the January 2023 sale of 22 private equity and hedge fund stakes by Fubon Life Insurance, valued at around $420 million, to buyers that included Pantheon.

This retreat precedes the introduction of a new capital regime in January 2026, known as the localised Insurance Capital Standards (TWICS).

Capital regimes assign risk weightings to different asset classes that determine the amount of capital that financial institutions must hold to guard against potential losses. Though TWICS risk charges are not yet fully disclosed, the regime is expected to increase the capital requirements and risk charge for different asset classes, including private equity.

“For the past few years, in response to the global market turbulence and regulatory changes, dynamically [rebalancing] our portfolio to the optimal scale and allocation is one of our main investment strategies towards [the] private market,” a Cathay Life spokesperson told PEI earlier this month.

“Meanwhile, Cathay Life still continues to closely explore good opportunities by committing to new private equity funds and re-ups [with] existing fund managers. We do believe private equity funds are still an essential asset class for insurers who are looking for long-term investments after TWICS adoption.”

Secondaries deal volume reached $109 billion last year, the second-highest level of all time, according to data from Lazard. LP-led transactions were estimated to account for 56 percent of deal volume, with liquidity the primary motivator. Only 4 percent of LP-leds were driven by regulatory or legislative changes.