Ardian, the fund of funds and secondary firm that spun out of French insurance giant AXA in 2013, deployed more than $10.8 billion in 2014 on secondary deals, potentially representing up to one-third of total secondary deal volume.
Market sources have projected that the total seconary volume for last year is somewhere between $30 billion to $35 billion.
Ardian earlier this week announced it had acquired a portfolio of 17 private equity LP stakes valued at $1.75 billion from the Pennsylvania Public School Employees Retirement System. That deal closed in December, Ardian said in a statement.
The Pennsylvania pension fund, which had $51.9 billion of total assets as of September, sold part of its private equity holdings to bring it closer to its 15 percent target, Evelyn Tatkovski Williams, a spokeswoman for the system, said in a prior interview.
The Pennsylvania deal was one of several Ardian completed last year after raising its sixth global fund, which closed on $10 billion last year. Fund VI raised $9 billion for secondaries and $1 billion for primary fund of fund commitments.
Fund VI is now 75 percent deployed, which is usually the time a firm will come back to market with its next fund. It’s not clear if Ardian is gearing up to raise its next secondary fund. Shree Dhond, a spokesman for Ardian, declined to comment.
Ardian’s other deals in 2014 included the purchase of 40 LP stakes from a sovereign wealth fund, with a total value of $2.38 billion, that closed in September. The sovereign fund is likely the Abu Dhabi Investment Authority (ADIA), according to sources and a posting in The Gazette, a public records publication in Britain. The notice in The Gazette revealed at least one of the funds in the transaction – ADIA sold its interest in Carlyle Europe Partners III to Ardian. The ADIA sale was run by Cogent Partners.
Ardian also bought a portfolio of 340 LP interests valued at about $1.3 billion from GE Capital in a deal brokered by Evercore in March.
In addition, Ardian purchased three LP interests from a U.S. pension fund valued at $627 million, which closed in November, and 30 direct assets from a U.S. financial institution valued at $804 million in July. Ardian also picked up 36 LP stakes from a sovereign fund valued at $1.36 billion in March, the firm said in the statement.
Ardian is one of the few secondary firms that buys entire portfolios on its own, rather than pieces of large portfolios. The firm believes it can act fast to close deals because it knows the underlying funds included in large portfolios through its fund of funds business.
“We were able to execute on this large portfolio given our strong existing relationships with the fund managers in combination with our excellent knowledge of the underlying assets,” Benoit Verbrugghe, head of Ardian US, said in a statement.
Ardian also uses leverage in some of its deals, Verbrugghe has said in past interviews.
Ardian doesn’t make its investment decisions based on discounts in the prices it pays but based on the quality of the underlying assets in the portfolios it buys.
Still, prices over the past year have been high. Over the summer, Cogent reported the average high bid for all strategies on the secondary market was 93 percent of net asset value in the first half of 2014. As the public markets have risen over the past year, the secondary market has followed. If the markets spiral into some kind of correction this year, the secondary market will likely follow (though on a lagging basis).
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