Swedish insurers shop €1.5bn funds portfolio

A collection of 23 regional Swedish insurers has put up one of the largest-ever secondaries offerings in Europe, including stakes in managers like TA Associates, BC Partners, TPG, Advent, Apax and Bain.

A huge offering of private equity interests, spurred by impending regulations, is shaking up the secondary markets in Europe.

A collection of regional Swedish insurance companies known as the Länsförsäkringar Alliance is selling up to €1.5 billion of its private equity holdings in an offering that includes some “high quality” funds, multiple secondary market sources told Private Equity International.

The sale, which is one of the largest to come out of Europe, is being run by Campbell Lutyens, a London-based placement agent and secondary advisor.

A spokesperson for Länsförsäkringar declined to comment. Campbell Lutyens could not be reached for comment.

The offering includes funds run by Bain Capital, Advent International, Apax Partners, BC Partners, Berkshire Partners, Madison Dearborn, TPG Capital, IK Partners and TA Associates, one source who has seen the offering said.

“[Länsförsäkringar] is a very sophisticated investor with great access,” one person with knowledge of the offering said. It’s not clear how long the offering has been on the market, nor is it clear if Länsförsäkringar is completely selling out of the asset class.

A large offering like that from Länsförsäkringar could attract so-called “non-traditional” buyers, institutions other than the large secondary firms that want to buy individual stakes in general partners they know and trust, according to one secondary investor with no connection to the deal.

European insurers are being pressured over their private equity holdings because of rules known as Solvency II. The rules force insurers to set aside reserves of capital based on the riskiness of their assets. For private equity, insurance companies would need to set aside €49 for every €100 invested, though they can also come up with their own risk models that would require the approval of regulators. The rules are still in the works and are expected to take effect in 2014.

Despite the impending rules, European insurers generally are not planning to exit the asset class en masse, according to a survey earlier this year by BlackRock.

The study showed that almost a third of insurers who responded said they would increase their allocations to private equity and hedge funds. Only 6 percent of respondents said they would decrease their exposure to alternatives.

Regulations governing private equity both in Europe and the US have caused financial institutions to flood the market with private equity interests. The volume of supply led to a record breaking year in 2011, with an estimated $25 billion of deal volume, and predictions of potentially $30 billion of transactions this year.