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Lexington backs $1bn-plus Ohio Teachers’ sale

The $95bn state pension had an 11.1% allocation to private equity over a 7% target prior to the transaction, according to Secondaries Investor data.

Lexington Partners has emerged as a buyer of a large portfolio of fund stakes sold by the State Teachers Retirement System of Ohio.

The portfolio of LP interests was over $1 billion in size, according to two sources with knowledge of the matter. The transaction closed on 30 September.

The deal included a €55 million stake in the 2017-vintage Bridgepoint Europe VI, a spokesman for Bridgepoint confirmed. Bridgepoint is the owner of Secondaries Investor‘s parent company PEI Media.

Lexington invested via its $14 billion 2018-vintage Lexington Capital Partners IX, according to a public filing. The New York-headquartered firm is seeking $15 billion for its 10th flagship programme, Secondaries Investor reported in May.

It is unclear if Lexington was the only buyer involved. Lexington declined to comment. STRS Ohio had not responded to a request for comment at the time of publication.

Evercore advised on transaction, Secondaries Investor understands.

STRS Ohio oversees $94.8 billion in assets under management, according to Secondaries Investor data. Before the sale, it had an 11.1 percent allocation to private equity against a 7 percent target.

The pension’s alternatives portfolio made a net internal rate of return of 44.99 percent in the year to 30 June, driving a 29.16 percent return for the whole portfolio, according to an investment committee presentation dated 21 October.

Recent outperformance has resulted in a numerator effect in many institutional portfolios as private equity allocations outpace other investment buckets. Blackstone president Jon Gray told analysts on its Q3 earnings call last week that the resulting overallocations would be “very bullish” for its secondaries business.

In a recent episode of PEI Media’s Spotlight podcast, Jake Stuiver, head of LP secondaries at M2O Private Fund Advisors, suggested now may be an ideal time to bring an LP portfolio to market as buyers look to balance out built-up single asset exposure.

– Rod James contributed to this report.