Sales of limited partnership interests are becoming bigger and bigger, with last week’s deal between the California Public Employees’ Retirement System (CalPERS) and Strategic Partners marking the largest-ever secondaries deal.
Large portfolio sales from pensions and sovereign wealth funds look set to continue as increasing volume shows sellers they can dispose of billion-dollar bundles within a matter of months, according to the London-based head of a major secondaries firm.
Here are some of the biggest secondaries deals to date:
1. CalPERS’s $3 billion sale to Strategic Partners
The Blackstone unit announced in early November that it had agreed to buy a portfolio of 43 international and domestic funds from CalPERS’s non-strategic, legacy real estate portfolio. The deal is the biggest secondaries deal so far and comprises over 350 underlying properties, mainly in the US, with significant exposure to Europe and a small exposure to emerging markets.
2. ADIA’s $2.4 billion sale to Ardian
The Abu Dhabi Investment Authority’s (ADIA) September 2014 sale to the French fund of funds included stakes in 3i, Apax Partners, Carlyle, Lion Capital, Montagu Private Equity, Terra Firma and Candover Partners funds, according to UK regulatory filings.
3. GM pension’s sale to China’s SAFE and Lexington Partners
In 2012, General Motors’s pension plan sold a portfolio of private equity stakes. It was split between China’s State Administration of Foreign Exchange (SAFE), which manages China’s $3.7 trillion in foreign exchange reserves, and Lexington Partners. The deal reportedly closed on between $1.5 billion and $2 billion, and included stakes in funds managed by EQT, Carlyle, Blackstone and CVC Capital Partners.
4=. Lloyds’s $1.9 billion sale to Coller Capital
In 2012, London-based secondaries firm Coller bought the portfolio of private equity stakes from Lloyds Banking Group in what was the largest unsyndicated secondaries deal at the time. The deal included stakes in 60 funds reportedly including Permira and Apax Partners, as well as nine co-investments and some mezzanine fund stakes.
4=. BAML’s $1.9 billion sale to Ardian
The 2010 sale by Bank of America Merrill Lynch (BAML) to Ardian, then AXA Private Equity, reportedly included stakes in funds managed by about 60 large and mid-market buyout firms, mostly US-based and raised between 2005 and 2008.
Outlook for 2016
While portfolio sales by banks have been mostly absent in 2015, big portfolio disposals from financial institutions are set to re-emerge as some banks still hold large chunks of private equity assets, according to another London-based source.
“Recently the market has been driven by a wider bunch of sellers including endowments, pension funds, sovereign wealths and the rise of GP-led deals,” the source said. “The rise of banks as sellers again will happen over the course of 2016 and 2017 as extensions to the Volcker Rule rears its head again.”