New York City Retirement Systems Sell Private Equity Fund Interests on the Secondary Market

by Patrick Adefuye

  • 09 Aug 2012
  • PE

The New York City retirement systems – New York City Employees' Retirement System, New York City Fire Department Pension Fund, New York City Police Pension Fund and New York City Teachers’ Retirement System – have sold $976mn worth of private equity fund interests on the secondary market, reducing their number of managers by nine. The interests were sold as two separate tranches, with the first consisting of interests in funds managed by Clayton Dubilier & Rice, Silver Lake and Thomas H Lee Partners, and the second consisting of funds managed by AEA Investors, Ethos Private Equity, HM Equity Management, NewSpring Capital, Tailwind Capital and Vitruvian Partners. The retirement systems were due to re-evaluate their portfolios to decide if they still needed to sell further interests. In this instance, they chose to only sell interests at an attractive price, and a portion of interests that had been made available for sale were withheld due to unattractive offers.

This sale follows the trend of public pension funds, and in particular US public pension funds, which utilize the secondary market in order to rationalize their private equity portfolios and reduce their number of manager relationships. At the start of the year, New Jersey State Investment Council sold $575mn worth of private equity stakes on the secondary market in order to consolidate both its private equity portfolio and number of manager relationships. California Public Employees' Retirement System (CalPERS) successfully sold portions of its private equity portfolio in 2011 and has indicated that it intends to continue to adjust “general partner concentration” in its private equity portfolio in 2012 and 2013.

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