Report: LPs align to demand better deal terms

The 10th largest public US pension has said a group of large institutional investors, including a sovereign wealth fund, are discussing how best to group together to obtain more favourable deal terms. The LPs are also reportedly conferring on investments in private equity firm franchises.

A group of large limited partners has been meeting for at least six months to determine how, collectively, they can best exploit investment opportunities, according to William Clark, director of the division which manages the $81 billion (€55 billion) New Jersey state pension fund.

“We think there are advantages for large institutional investors banding together to drive more favourable terms,” Clark told The Wall Street Journal. “You saw what those advantages are in the Merill and Citi deals.”

He told the newspaper that New Jersey has held “early stage” talks with at least one sovereign wealth fund, in addition to other US pensions, further solidifying Stephen Schwarzman’s assertion this week that sovereign funds are investors akin to public pensions. The investors have also held discussions on the matter with private equity firms, Clark added.

He also said the talks have touched on the purchasing of stakes in private equity firms, such as China’s nearly 10 percent stake in The Blackstone Group; the California Public Employees’ Retirement System’s stakes in The Carlyle Group, Silver Lake, Apollo Management and TPG Growth; and Abu Dhabi’s stakes in Carlyle and Apollo.