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Montana puts PE funds up for sale

Fund interests from managers including energy specialist First Reserve are among the stakes put up for sale by the state's board of investments.

Fund interests from managers including energy specialist First Reserve and mid-market firm Madison Dearborn are among the stakes that have been put up for sale by the Montana Board of Investments (MBOI). More than 40 offers have come in for the eight stakes from four GPs, according to recent meeting minutes.

The US public pension aims to take advantage of “the current valuation perspective and the good market timing and strong demand and ample dry powder among secondary funds”, according to comments from chief investment officer Clifford Sheets, as documented in the minutes.

Sheets added that the funds chosen for sale were not “troubled” but were funds that the LP had decided not to pursue an ongoing “strategic relationship” with. The names of other fund managers have not been disclosed; meeting minutes note the total NAV of the funds was $127 million as of 30 September 2013.

MBOI estimates that its private equity allocation will be 10.4 percent once the sale completes. It said that the decision to sell some of its private equity exposure was not to change the allocation of private equity, but rather to protect it should stock markets fall. MBOI said such a decline would probably result in an increase in the weight of its allocation towards private equity.

It was unclear at press time whether MBOI had already sold all or some of the fund stakes. “Last week proceeds of $60 million were received and an additional $30 million is due at the end of June,” according to the meeting minutes, which noted $36 million from a separate secondaries sale was expected at the end of April.

MBOI could not be reached at press time.