Top five secondaries deals of 2023

Both LP-led and GP-led deals made it to the list this year as market participants seek innovative ways to access liquidity.

Dealmaking in the secondaries market remained strong over the past year as LPs and GPs continue to pursue liquidity options amid economic uncertainty.

The first half of the year was relatively slow, with transaction volume dipping to $40 billion from $53 billion year-on-year, according to Campbell Lutyens’ 1H 2023 Secondary Market Overview.

The market gained momentum in the latter half of the year. According to Campbell Lutyens’ projection, transaction volume will reach $110 billion by the end of this year, slightly up from $106 billion in the previous year.

Here are the top five deals that caught our attention in 2023, in no particular order:

Kaiser Permanente offloads $5 billion portfolio

One of the largest secondaries deals of the year was launched by Kaiser Permanente, which ultimately sold a $5 billion portfolio to a group of buyers reported to include Ardian, Blackstone and Apollo Global Management. The initial offering was for up to $6 billion with a potential discount to net asset value, our colleagues at Buyouts reported. The California-based healthcare provider appeared to be using secondaries sales to rebalance its portfolio, which grew quickly, leading to it becoming overexposed to private equity. The deal was one of several large LP sales that revived the secondaries market following last year’s slowdown.

Alpine Investors’ $3.4 billion continuation fund

The San Francisco-based firm closed a $3.4 billion continuation fund for Apex Service Partners, a home and commercial services platform. Affiliate Buyouts first reported on the transaction in February. The CV was backed by a group of big names, including Blackstone Strategic Partners, HarbourVest Partners, Lexington Partners and Pantheon. Alpine also invested $450 million from its ninth flagship fund into the continuation vehicle. Investors in the old fund – Alpine Investors VII – were given the option to either cash out or roll a portion into the continuation fund.

J-STAR completes Japan’s first continuation fund

Japanese buyout firm J-STAR ran what is understood to be Japan’s first continuation fund via a multi-asset transaction. In the deal, J-STAR moved four waste treatment and recycling assets into a holding company named Renatus. The company was backed by J-STAR’s fifth flagship fund as well as a continuation vehicle, which received aggregate capital commitment of ¥17.9 billion ($126.2 million; € 114.8 million). Neuberger Berman was the lead investor on the transaction. J-STAR had been considering GP-leds to supplement its heavy bolt-on activity before the deal, affiliate title Private Equity International reported last year.

CPP Investments sells 20 fund interests to Ardian

Ardian bought 20 LP fund interests from CPP Investments, most of which are buyout funds in North America and Europe. The sale generated approximately C$2 billion ($1.45 billion; €1.36 billion) in net proceeds for the Canadian pension giant. Ardian did not take up the full offering; instead, it was able to pick and choose the exposure it wanted out of the pool and put together its own portfolio, sources told affiliate title Buyouts.

Pollen Street Capital’s complex continuation fund

London-headquartered Pollen Street Capital ran a continuation fund process involving two assets, including the insurance group Markerstudy. The transaction was impressive because it took place concurrently with Markerstudy’s acquisition of Atlanta Group, a personal insurance brokering business. Secondaries buyers, including AlpInvest Partners, LGT Capital Partners and StepStone, are understood to have wanted to ensure clarity on the M&A process before backing the secondaries deal.

– Adam Le contributed to this report.