The Ontario Municipal Employees’ Retirement System is selling a big chunk of its private equity portfolio as it works to reduce its fund commitments business in favour of building up its direct investing capabilities.
The C$55 billion pension system is shopping a $750 million portfolio of mostly buyout funds, according to three people with knowledge of the sale. The portfolio includes funds from large firms like Kohlberg Kravis Roberts, TPG, Apax Partners and Hellman & Friedman, one of the people said.
UBS is running the sale, which had a tight deadline. According to one source, discounts ranged in the “single digits”.
OMERS declined to comment.
OMERS has been working to reduce the fund commitments side of its private equity portfolio as it builds its direct investment capabilities. OMERS Private Equity had not made a fund commitment in “two to three years”, Michael Nobrega, OMERS’ chief executive officer, told Private Equity International in a prior interview.
While the system was split roughly 57 percent in fund investments and 43 percent in direct investments as of last year, OMERS PE ultimately wants to have about 85 percent of its portfolio in direct investments and 15 percent in funds.
Because of the strategy shift, earlier this year, OMERS PE’s head of funds and co-investments, Martin Day, left the organisation.
OMERS’ offering is of similar size with other portfolios on the market this year, including one from New York City’s pension system, which was shopping a $750 million portfolio earlier this year, part of what was expected to be a $2 billion sell-down of its private equity portfolio. The Government of Singapore Investment Corporation has also been selling about $750 million worth of its private equity portfolio this year.
One of the biggest offerings on the market came from Sweden, where a group of regional insurance companies known as the Länsförsäkringar Alliance was selling up to €1.5 billion of its private equity holdings. Länsförsäkringar’s sale included “high quality” funds and had been looked at by numerous potential buyers, according to sources with knowledge of the sale. One of the biggest to come from Europe, the sale is being run by Campbell Lutyens, a London-based placement agent and secondary advisor.
The large portfolios on the market this year are helping to drive secondary deal activity to levels that are on track with last year, a record-breaking year with deal activity totaling about $25 billion.