North Carolina sells stakes in mega-funds

The investment management division of North Carolina’s state treasury has completed the sale of about $850 million of private equity holdings in funds run by Apollo Global Management, TPG Capital and Warburg Pincus.

Cogent Partners, an investment bank specialising in the secondaries market, worked with the investment division on the sale. Cogent also is working with New Jersey’s investment division to sell up to $1 billion of private equity holdings.

“The secondary market provided us with an opportunity to add value to the plan through the sale of these positions,” a spokesperson for the system told Private Equity International in an email. The fund interests were sold in the first few months of the year, the spokesperson said.

North Carolina’s state pension, with $75 billion in assets, has a 4.5 percent target allocation to private equity, with a 5 percent cap. Its actual allocation was 4.8 percent as of June, the spokesperson said.

The state system includes pensions for teachers and other state employees, judges, firemen and rescue workers, local government employees, legislators and national guardsmen.

The pension has been a long-time investor in the asset class and its portfolio was valued at about $3 billion as of 30 June, 2011. This year the system, along with numerous other US public systems, decided to use the secondary market to manage its vast private equity portfolio. The pension system does not anticipate selling any more fund interests on the market, the spokesperson said.

Reportedly, New York City’s pension system wants to sell up to $2 billion worth of private equity holdings. Earlier this year, the system published a request for proposal for firms to run the sales process. The California Public Employees’ Retirement System, the School Employees Retirement System of Ohio and the New Mexico State Investment Council have all sold private equity holdings on the secondary market this year.