New Jersey reaps $575m on secondary sales

The $69bn state pension has sold stakes in funds run by GTCR, Apollo, Carlyle, Oaktree, TPG, Wayzata, Black Diamond Capital Management, Credit Suisse and THL as it works to shrink the size of its portfolio to make it more manageable.

New Jersey’s $69 billion state pension system has reaped proceeds of $575 million on sales of stakes in private equity funds with an aggregate net asset value of $613 million as it works to consolidate its portfolio and make room for new commitments.

The state treasury’s investment division has worked with Cogent Partners to sell stakes in funds run by GTCR, Madison Dearborn, TPG Capital, The Carlyle Group, Oaktree Capital Management, Black Diamond Capital Management, Credit Suisse, Apollo Global Management and Thomas H Lee Partners.

New Jersey has completely sold out of sold all its stakes in GTCR Fund IX/A, Madison Dearborn V-A, Carlyle Mezzanine Partners, OCM Mezzanine Fund, Credit Suisse Banking Partners IV, Wayzata Capital, Thomas H Lee Equity Partners VI and BCDM Opportunity Fund II. The pension system sold partial stakes in the other funds.

So far, the division has sold close to 12 percent of its total private equity portfolio, with at least one small sale left to go that should close by the end of January, according to pension documents. The remaining sale is a small stake in TPG VI, investment staff said in documents.

The majority of the secondary transactions were agreed with deferred payment provisions for two years, which allowed the division to get better pricing, the documents said.

New Jersey’s private equity sale is one of several that have hit the market this year. Other sellers include the New York City pension system, which has hired UBS to sell about $750 million worth of private equity, and the Government of Singapore Investment Corporation, which also hired UBS to run a sale of about $750 million in LP stakes.

Sources expect – or have seen – several other multi-million dollar portfolios on the market this year, including some of up to $1 billion. Financial institutions, especially those in Europe, will continue to divest private equity assets because of governmental regulations and general capital raising needs. More public pensions in the US are expected to come to the market with offerings as they work to shrink their programmes to more manageable levels and make room for new funds.

Endowments also have come back to the market, including Harvard University, which is offering $1.5 billion of private equity stakes. However, one secondary market source who has seen the portfolio said Harvard’s offering includes a lot of underperforming funds that may underwhelm the endowment’s expectations prospective buyers?. Bids on the Harvard portfolio were due this week, sources said.

While the secondary market is expected to be busy in the early part of this year, sources have pointed out that sellers may be disappointed in pricing because of the sheer amount of inventory on the market.