Tesco shops £1bn-plus private markets portfolio

The portfolio is understood to comprise private equity, credit, growth and infrastructure stakes in a Campbell Lutyens-advised process.

The corporate pension of UK grocery chain Tesco is in the final stages of offloading a portfolio of private markets fund stakes, Secondaries Investor has learned.

The pension fund is looking to sell around £1 billion ($1.2 billion; €1.12 billion) worth of interests, according to three sources familiar with the matter. The portfolio sale, which launched around the summer, contains private equity, private credit, growth equity and infrastructure interests, according to two of the sources.

Campbell Lutyens is advising Tesco on the sale, the sources said.

Affiliate title Buyouts reported on Tuesday that the sale could be as large as £1.5 billion.

Secondaries Investor understands the process is at an advanced stage with multiple buyers negotiating sales and purchase agreements. The process is understood to be part of Tesco pension’s long term de-risking strategy and re-balancing.

Separate spokespeople for Tesco and Campbell Lutyens declined to comment.

Tesco has committed to private markets funds including those managed by EQT and Janus Henderson Investors, according to PEI data. It is unclear which fund stakes are included in the portfolio for sale.

As of 2021, the Tesco PLC Pension Scheme had more than 340,000 members. It was closed to future service benefits in November 2015, according to its 2021 Stewardship Report.

Seller sentiment is at a five-year high, Secondaries Investor reported on Tuesday. According to affiliate title Private Equity International‘s upcoming LP Perspectives 2023 survey, 22 percent of respondents intend to sell LP stakes only in the coming year – representing the largest portion of LPs to do so in the past five years. A further 6 percent plan to both buy and sell.

Average pricing for LP buyout portfolios was around 82 to 87 percent of reference date net asset value, according to a quarterly report from PJT Park Hill. LP portfolio sales represented about 44 percent of the estimated $20 billion to $25 billion of total volume in the third quarter, according to the report.

LPs appear to be growing more willing to sell in the tight liquidity environment. Evercore reported in its first-half volume survey that 77 percent of respondents said they sold in GP-led asset-based deals, up from 64 percent in 2021. While asset deals like single and multi-asset continuation fund processes are different, the numbers show increasing appetite among LPs for liquidity in secondaries.