The New York City Retirement System is searching for a firm to run a secondaries sale of stakes in private equity and possibly real estate funds.
The $113 billion pension has published a request for proposal for a firm or firms to provide “brokerage services for the sale of interests in private equity partnerships” for the five pensions that make up the city’s system.
The system has not definitely committed to sell and could decide to forego a sale if it doesn’t get the right price for the stakes.
“The selected firm will be expected to provide operational support in connection with a secondary sale of certain private equity interests within the private equity portfolio,” according to the RFP. “The firm is expected to make the best possible price for the portfolio or each individual partnership through the secondary market.”
The New York City system includes the New York City Employees’ Retirement System, the Teachers’ Retirement System of the City of New York, the New York City Police Pension Fund and the New York City Fire Department Pension Fund.
It’s not clear how much the system wants to sell, or what kinds of funds. One secondaries market source said it’s not surprising the pension system wants to sell fund interests. Market sources said the pension has been considering a secondaries sale since at least last summer.
“It’s always been known the portfolio of New York City was too big, not concentrated enough,” the source said.
The system as a whole has about $13 billion in private equity commitments as of 30 September. The employees’ retirement fund has $5.46 billion in commitments, the teachers’ pension has $3.38 billion, the police pension has $2.87 billion and the fire department pension has about $1 billion in commitments.
One factor in the decision to access the secondaries market may be the hiring earlier this year of Barry Miller as head of private equity at the retirement system. Miller has extensive secondaries experience, having worked as a partner at Pomona Capital and having headed up the New York office for AXA Private Equity, where he focused on secondaries transactions.
Proposals must be submitted by 21 June.
New York City is just one of several public pension systems to consider using the secondaries market to trim down the size of its private equity portfolio. New Jersey also wants to hire a firm to run a secondaries sales process, while the California Public Employees’ Retirement System has already sold a portfolio. Public institutions in North Carolina, New Mexico and Ohio have been considering or have transacted on the market this year.