Sante Fe-based sovereign wealth fund New Mexico State Investment Council has recently commenced discussions on the possibility of becoming sellers on the secondary market. Though no transactions has been completed to date, the council’s private equity team has been actively identifying legacy funds that could be sold on the secondary market, exploring ways to reduce the number of private equity partnerships in its portfolio. Currently its allocation stands at 10% and the council has a desire to decrease the number of limited partnership ownerships it manages, setting a long term goal of halving its roster of approximately 120 private equity vehicles and 80 GPs.
In all, Preqin's Secondaries Market Monitor service has profiles of 322 institutional investors with an interest in selling private equity fund interests on the secondary market within the next 24 months. Public pension funds constitute the highest proportion of this, representing 14% of potential sellers profiled, with banks and private sector pension funds representing 10% each. The secondary market has been used as a portfolio rationalization tool by investors in the past in a number of notable transactions, such as the sale of fund interests by the New York Retirement Systems in 2012 in a transaction valued at $976mn.