PSP shops $1bn private equity portfolio – exclusive

PSP Investments, one of Canada’s largest public pensions, has become the latest North American institutional investor to tap the secondaries market, Secondaries Investor has learned.

The Ottawa-headquartered pension is working with advisor Lazard to offload a bundle of buyout interests worth around $1 billion, according to two sources familiar with the matter.

It is understood the process is entering the bidding stage.

PSP joins more than 10 global institutional investors who have brought large private markets portfolios to market this year. In November Ontario Teachers’ Pension Plan sold a $1.7 billion portfolio of global private equity interests to Canada Pension Plan Investment Board, while Maryland State Retirement and Pension System offloaded around $1 billion worth of stakes to Ardian the same month, as Secondaries Investor reported.

The largest portfolio sale to hit the market this year was American International Group‘s $2.3 billion worth of private markets stakes. Ardian and PineBridge Investments emerged as the buyers in the unintermediated deal in August, as Secondaries Investor reported.

According to sister publication Private Equity International‘s LP Perspectives 2019 survey, almost 48 percent of LPs plan to buy or sell private equity fund stakes in the next 12 months. LP positions still account for bulk of secondaries deal volume, comprising 63 percent of the $32 billion in deal volume in the first half of this year, according to Evercore’s H1 2018 Secondary Market Survey Results.

Private equity delivered a 12.9 percent one-year return for PSP in fiscal 2018. The pension had C$19.4 billion ($14.5 billion; €12.7 billion in net private equity assets under management as of 31 March, accounting for 12.7 percent of the pension’s C$153 billion in total assets under management, according to its latest annual report. Its target allocation to the asset class is 13 percent.

PSP and Lazard declined to comment.