The asset management and overseas investment arm of China’s Ping An Insurance has completed a transaction to free up balance sheet capital, making room for asset management efforts focused on overseas investments in secondaries and co-investments.
The 3.78 trillion yuan ($592 billion; €520 billion) investor closed two funds: Ping An Global Equity Selection Fund II and GP Opportunities Fund, according to a statement last month. The vehicles received commitments totalling $750 million from a group of investors, including Goldman Sachs Asset Management; Montana Capital Partners; and Ardian.
Western GP fund stakes were lifted off Ping An’s balance sheet and placed into Global Equity Selection Fund II, Secondaries Investor understands. Ping An will remain exposed to the positions as an LP in the new fund, and will continue to own the relationships with those managers, according to a source familiar with the deal.
The second component is the unfunded capital that will make investments in secondaries and co-investment deals out of the GP Opportunities Fund, on the basis of Ping An’s relationships with Western managers.
Despite facilitating a new competitor’s entrance into the market, the potential for long-term strategic collaboration on transactions between the groups involved was deemed constructive by investors, Secondaries Investor understands.
It is unclear how many fund positions were transferred off of the balance sheet and how much of the $750 million is earmarked for new deals.
A key element of this transaction was freeing up balance sheet capital to pursue that strategy, which has been challenging for the Chinese insurance giant, an Asia-based intermediary told Secondaries Investor.
Ping An has been building out its in-house asset management capabilities, taking in third-party capital to help it do so, according to the source close to the deal.
This transaction has similarities with Mubadala Capital’s August deal, in which assets were sold to a consortium led by BlackRock, alongside a $400 million unfunded primary commitment to a fresh Mubadala fund.
There is a trend for large investors growing their asset management practices with third-party capital to free up balance sheet capital, according to the source. Managing third-party capital does come with increased regulatory and relationship burdens to bear, the source cautioned.
This appears to be at least the fourth such deal Ping An has undertaken. Most recently, the firm tapped the secondaries market for liquidity in July when Coller Capital, alongside co-investment vehicles, invested $580 million in the transaction to back a portfolio of four flagship credit funds managed by North American and European GPs.
In October 2020, China Ping An Insurance Overseas sold an $875 million strip of assets off the balance sheet to a group of investors led by Montana Capital Partners and Singapore sovereign wealth fund GIC, and used it to seed two private equity funds, including predecessor Global Equity Selection Fund I.
In 2019, the institution closed a similar process, involving $758 million of infrastructure assets that Ardian backed, as Secondaries Investor reported.
Goldman Sachs, Montana and Ardian declined to comment for this story. Ping An did not respond to request for comment.