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Institutional Investors Looking to Sell Fund Interests on the Secondary Market - July 2014

by Francesca Braganza

  • 14 Jul 2014
  • PE

Preqin’s Secondary Market Monitor product currently tracks 219 institutional investors that have demonstrated an interest in utilizing the secondary market in order to exit their private equity fund commitments. Our analysts actively track industry news sources and maintain frequent conversations with LPs in order to obtain updates on secondary market activity directly.

Recently, it was confirmed that Florida State Board of Administration is currently looking to sell a portfolio of legacy private equity fund interests. When valued in June 2014, the portfolio was estimated to be worth $77.2bn. Its private equity portfolio is primarily made up of US-focused buyout vehicles, although it has exposure to a range of other fund types on a global scale. Florida State Board of Administration will handle the transaction itself, and has not hired an external intermediary to assist it in selling off the fund interests.

Another example of an active LP on the sellers market is Abu Dhabi Investment Authority. The sovereign wealth fund is currently considering options to sell a portfolio of private equity fund stakes valued at $2bn. The portfolio consists primarily of buyout fund interests, with the majority of Abu Dhabi Investment Authority’s existing investments focused on opportunities in the US and Europe.

Preqin’s data shows that public pension funds make up the largest proportion of these LPs, representing 14%, with banks and investments banks being the second most common investor type, accounting for 13% of the total group of sellers. Private sector pension funds, foundations and insurance companies each make up 10% of these LPs, with other investor types including asset managers, investment companies, endowment plans and family offices.

Geographically, US-based institutional investors represent nearly half (46%) of the group showing an interest in the secondaries market. Thirty-eight percent are headquartered in European countries such as the UK and Switzerland, with the remaining 16% spread across Asia and other countries.

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