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In surge of traditional LP sales, Shell pension shops ~$1.3bn PE portfolio

The sale is one of several that hit the market since the second half of 2021, when traditional LP portfolio sales came surging back into the market.

International oil giant Royal Dutch Shell’s corporate pension is selling a $1 billion-plus portfolio of stakes in mostly older private equity funds in a cleanup sale, sources told affiliate title Buyouts.

The secondaries sale is one of several that has hit the market since the second half of 2021, when traditional LP portfolio sales came surging back into the market amid rich pricing and buyer desire for diversification.

Many sellers took advantage of prices, which, for buyout funds reached almost par levels, to dispose of older pools or cash out of funds to make room for new allocations.

The Shell portfolio of interests in 55 funds had a net asset value of around $1.3 billion, according to information seen by Buyouts. The largest exposure, representing about $200.7 million of NAV, of which $33.5 million is unfunded, is to Blackstone Group’s sixth fund, which closed on $15.2 billion. Blackstone launched fundraising on the sixth flagship pool in the teeth of the global financial crisis, lowering its initial $20 billion target and unofficially pausing fundraising for a period of time.

Fund VI was generating a 13.1 percent net internal rate of return and a 1.7x multiple as of 30 June, according to information from California Public Employees’ Retirement System.

Other funds in the Shell portfolio include Yucaipa American Alliance Fund II, BC European Capital IX, TDR Capital II, HitecVision VI, Blackstone VII, AnaCap Financial Partners III, SunTX Fulcrum Fund, Carlyle Group VII, TPG Partners VI and Advent International GPE VI, according to information seen by Buyouts.

Park Hill Group is working as secondaries adviser on the sale. No one from Shell returned comment requests.

Shell’s pension is administered by Shell Asset Management. It had about $17 billion in assets under management as of November, according to research from PEI.

Large portfolio sales took up buyer interest in the second half of 2021 as many buyers looked to diversify beyond the concentrated bets they made in the early parts of the year and in 2020.

In 2021, GP-led secondaries deals like single-asset continuation funds represented about 52 percent of the $132 billion in total estimated activity, according to Jefferies’ full-year secondaries volume report, published this week. Traditional LP volume was $64 billion in 2021, representing a 156 percent increase from 2020, Jefferies said.

The sales have come amid an environment of rich pricing, which generally helps convince institutions to move forward with contemplated rebalancing. Pricing for buyout funds hovered around 97 percent of net asset value, Jefferies said.

This article first appeared in affiliate publication Buyouts