Indiana to pare down portfolio

The state’s $25bn Public Retirement System is offloading more than $800m-worth of fund commitments as part of a portfolio ‘clean up’.

The Indiana Public Retirement System is selling a portion of its private equity portfolio as it works to reduce non-core relationships and better concentrate its programme, according to several secondary market sources.

The $25 billion system has hired UBS to help sell the portfolio, which is valued at around $220 million, according to several sources. Private Equity International has learned that Greenhill & Co. was hired to help the system sell more than $600 million of private equity holdings.

Indiana, Greenhill and UBS did not return calls and emails for comment.

Indiana’s offering includes mostly US and European buyout funds, including at least 23 funds managed by firms like GTCR and Candover, according to one person with knowledge of the sale.

The bulk of the portfolio being unloaded was held by Indiana’s state teachers’ pension fund, sources said. Indiana merged several pension funds, including its public employees’ and teachers’ pension funds, last year into one public retirement system.

Bob Clone

After the merger, much of the private equity staff left the systems, including Greg Davis, the former director of private equity with Indiana’s Public Employees’ Retirement System, who joined 3M’s corporate pension plan as director of private equity, and Bryan Martin, the former director of investments with the teachers’ fund, who joined the investment team at New Jersey’s state pension system.

The head of private equity at the combined system is Bob Clone, who took on the role last year after leaving a senior portfolio manager post at the Michigan Treasury Department.

Clone had been working to “clean up” the private equity portfolio at Indiana since he started, according to several secondary and LP sources familiar with his thinking.

According to one person with knowledge of the portfolio, Indiana Teachers’ private equity programme had a large number of small fund interests with different managers, making the portfolio unwieldy for the small team in charge of managing it. Sources described “small commitments” as in the range of $10 million to $20 million, though that could not be confirmed with Indiana.

The sale also will make room for new commitments, the person said.

Indiana’s secondaries offering is one of the bigger ones on the market right now as sources have seen a slowdown in the number of mega-offerings ($500 million and up). GM was reportedly shopping a large portfolio of fund interests, according to Dow Jones, but beyond that the market has seen a dearth of mega-offerings, sources said.

However, sources said the market remains active with small sales, and several secondaries professionals have pegged total deal volume for 2012 at around $25 billion or so, similar to last year’s record-breaking pace.