Partners Group eyes ‘niche’ LP portfolios amid split pricing market

The firm invested $7.7bn in 'portfolio assets' that include secondaries deals last year.

Partners Group is focusing on select areas of the LP portfolio market amid a bifurcation in pricing for fund stakes.

“After somewhat light secondary activity for us in the prior years, we’ve actually had a pretty strong [year],” David Layton, the firm’s co-chief executive said on an AuM conference call on Tuesday. “We really want to try to take our niches in the portfolios we have gone after.”

The firm invested $7.7 billion last year in what it calls “portfolio assets”, which include secondaries transactions and primary fund commitments. Such transactions accounted for 40 percent of the firm’s investment volume.

“In terms of pricing, what we’ve seen in general is a continuation of the bifurcation between older, lower quality portfolios, which trade at discounts, and less mature, higher quality portfolios, which have been trading at premiums,” Benno Lüchinger, managing director, private equity integrated investments, told Secondaries Investor.

Buyout funds attracted bids of 96 percent of net asset value in the fourth quarter last year  a 2.34 percentage point rise compared with a year earlier, according to intermediary Setter Capital’s December price report.

Partners Group has been leveraging its expertise across asset classes to bid on secondaries portfolios, Layton said. “We were able to put a bid that leveraged the PE component of the portfolio together with private real estate to put together a compelling and attractive offer.”

The firm expects to raise between €13 billion and €16 billion in commitments across its private markets strategies this year, together with about €7.5 billion in tail-down effects from its more mature programmes and potential redemptions from liquid and semi-liquid programmes.

“2019 is still young,” André Frei, partner and co-chief executive, said on the call. “Many variables will drive the actual outcome but we are confident that 2019 will be a strong fundraising year.”

The firm brought on board former UK prime minister Gordon Brown in January as part of an external advisory group for PG LIFE, which will focus on investments that meet the United Nations’ sustainable development goals, such as poverty alleviation and improving access to healthcare.