New Jersey scores $268m in secondary sale

The New Jersey Division of Investments has sold stakes in GTCR, TPG and Madison Dearborn V-A, which sold at a discount.

The New Jersey Division of Investment has completed the sale of its holdings in four private equity funds, generating around $268 million in sales proceeds. The sale represents a third of those the division expects to sell between now and the end of the year, with eight more transactions to be completed by 31 December.

New Jersey sold its stake in GTCR Fund IX/A, Madison Dearborn Capital Partners V-A, TPG Partners V and TPG Partners VI, according to pension documents. All but the Madison Dearborn fund generated sales proceeds above net asset value. Madison Dearborn was sold for $88.2 million after being valued at $105.6 million as of 30 June.

The four closed transactions traded at 97.65 percent of NAV and 89.04 percent of cost in the aggregate, according to documents.

New Jersey received a “high level of demand from numerous market participants” for its portfolio. The majority of the transactions have been agreed upon on a two-year deferral basis, which will allow the division to attain better pricing, according to the documents.

Also, acccording to documents, final bids for the transactions were received before the onset of the European debt crisis, which has impacted the global financial markets and “resulted in a high level of volatility and general deterioration in secondary market pricing”.

New Jersey could not be reached for comment as of press time.

The State Investment Council approved procedures for the sale in March. Chief investment officer Tim Walsh said New Jersey would work to identify 15 to 20 funds to sell. The pension is not a “distressed seller”, Walsh said, but would be “opportunistic”.

“Prices in these investments have come up to levels where it’s time to either take profits or move on,” he said. The pension would like to use the secondaries market to cull some of the managers from its $4.6 billion portfolio who it is not likely to re-up with, Walsh said at the time.

The pension system appointed Cogent to run the sale in October.

In addition to its activity on the sell side, New Jersey also purchased a secondary stake in Blackstone Real Estate Partners VI for $39 million plus $6 million in uncalled commitments from a distressed seller. The stake, bought at a 22 percent discount from the fund’s NAV as of 31 March, is a re-up for the pension system, having committed $100 million to the fund in 2007.

Blackstone Real Estate VI was generating a 1.33x multiple and 12.7 percent internal rate of return as of 30 September, according to pension documents. The fund focuses on public-to-private acquisitions of real estate companies, recovering office markets, hotel repositionings and non-US properties.