It was recently announced that California Public Employees' Retirement System (CalPERS) is looking to sell approximately USD 800 million of private equity fund interests on the secondary market. The portfolio consists of stakes in large buyout funds from well-known private equity fund managers and is said to be around 60% unfunded. CalPERS is known to be offering 20% of its stakes in Apollo Investment Fund VI, Apollo Investment Fund VII, Carlyle Partners V, KKR Fund 2006, Providence Equity Partners VI and Silver Lake Partners III. The sale is expected to take place fairly quickly and will represent one of the largest secondary market sales of early 2011. UBS Investment Bank Private Funds Group is brokering the sale, which has been named Project Alpha. The retirement system began looking into a possible secondary market sale back in February 2010 as it was considering cutting the number of private equity firms it invests with to improve returns and reduce costs. However, it felt that pricing on the secondary market was not favourable to sellers at that time.
The private equity secondary market is a rapidly evolving and non-transparent market. The Preqin Secondary Market Monitor provides vital intelligence for sellers, buyers and advisors and includes profiles for over 230 potential secondary market sellers.