Wellcome Trust to sell £3.8bn in fund interests

The UK’s largest charity has become the latest institutional investor to begin offloading private equity fund commitments, putting its entire £3.8 billion (€4.6 billion; $5.9 billion) private equity portfolio up for sale.

Chief investment officer of The Wellcome Trust, Danny Truell, told the Financial Times that the sell-off was aimed at taking advantage of the US dollar’s strength against the British pound.

Wellcome Trust: seeking liquidity

He added that The Wellcome Trust, which funds medical projects for both humans and animals, is looking to rejuvenate its buy-out and venture capital portfolio, as it sees more potential upside on future private equity investments than those made in recent years. The Wellcome Trust’s portfolio comprises £1.2 billion of buyout fund investments, £600 million of venture capital fund investments, £200 million of direct co-investments and £1.8 billion in uncalled fund commitments.

The need for liquidity is pushing increasing numbers of institutional investors to sell limited partner commitments in the secondaries market.

Last week PEO reported that Harvard Management Company, manager of the university’s $37 billion endowment, would move to sell $1.5 billion in private equity investments, while Swiss fund of funds manager AIG Private Equity, which is not a subsidiary of the US insurance giant, sold a selection of limited partner interests to two investors for $21 million at a discount of around $6.6 million.

Secondary investors expect supply in the market, which has already increased, to surge further in the first half of 2009 as more LPs move to access liquidity.