Financial Institutions and the Private Equity Secondary Market - August 2012

by Patrick Adefuye

  • 23 Aug 2012
  • PE

Preqin’s data shows that financial institutions, banks and insurance companies constitute 23% of the total number of LPs that have indicated a likelihood of selling fund stakes on the secondary market in the future. Regulatory pressure is likely the main motivation, with Basle II and the Volcker Rule making it more expensive for this investor type to hold relatively illiquid assets such as private equity.

In the past month UK bank Lloyds Banking Group sold a portfolio of private equity funds to secondary fund of funds manager Coller Capital worth approximately £1bn. The assets in question include undrawn commitments expected to be £220mn by the completion of the deal. The portfolio is believed to consist of 70 mainly Europe-focused buyout fund interests. Coller completed the purchase through its Coller International Partners VI, which held its final close last month on $5.5bn – the joint third largest amount ever raised for a secondaries vehicle. Campbell Lutyens ran the sales process.

Länsförsäkringar, the Swedish Insurance company, is reportedly close to selling a portfolio of around 36 private equity fund interests, worth up to €1.5bn, on the secondary market. It is believed that sovereign wealth fund Abu Dhabi Investment Council and Australia-based asset manager QIC have shown an interest in the portfolio. Länsförsäkringar has a long history of committing to buyout funds, particularly Europe- and North America-focused vehicles. Some of its known fund commitments include BC European Cap VII, BC European Cap VIII, Charterhouse Capital Partners VIII, and Doughty Hanson & Co II. Campbell Lutyens is managing the sale of the assets.

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