Firms & Funds

Norinchukin explores potential largest-ever LP-stake sale

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A businessman looks at cherry blossoms in almost full bloom in Tokyo, Japan, April 1, 2016. REUTERS/Issei Kato TPX IMAGES OF THE DAY - D1AESVVAGTAB
  • Norinchukin in ’19 sold large portfolio to Lexington
  • Portfolio may be largest-ever sold on secondary market
  • Secondary market in 2018 exceeded $70 bln volume

Earlier this year, the potentially largest-ever GP-led process hit the market when Energy & Minerals Group launched a restructuring of older funds.

Now, Japan’s Norinchukin Bank is eyeing a sale of a portfolio of traditional limited partner stakes that could be valued at $4 billion to $5 billion, three secondary-market sources told Buyouts.

At that size, the portfolio would be the largest ever sold in the secondary market.

Greenhill Cogent is secondary adviser on the deal, sources said.

The portfolio is a mix of assets and includes large positions in real assets, sources said.

Norinchukin earlier this year sold a traditional LP portfolio in an about $1.4 billion deal to Lexington Partners, sources said. Why Norinchukin is selling out of so much of its private-market exposure is unclear.

Norinchukin Bank supports Japan’s fishing, agriculture and forestry industries. As of March 31, 2018, it had an about $11.5 billion alternative-investment portfolio, consisting of exposure to private equity, real estate, infrastructure and hedge funds, the website said.

“Ten years ago, it would have moved the market, and I think it would have sent shockwaves into the system,” one secondary-market buyer told Buyouts in a recent interview about $5 billion secondary deals.

“The market has grown in deal volume and capital available for deals, and we’re now at the level that deals like that have a place in today’s market. It’s noteworthy, but I don’t think it’s a game-changer.”

Other large LP-stake sales include AIG’s sale of a PE portfolio valued at about $2.3 billion last year to Ardian and Pinebridge, Secondaries Investor reported.

CPPIB acquired a portfolio valued at about $1.7 billion last year from Ontario Teachers’ Pension Plan, Buyouts reported.

Total secondary-market deal volume in 2018 came in around $75 billion, including real estate and infrastructure assets, a year-end report from UBS shows. Total PE secondary volume was estimated at $67 billion, UBS said.

Action Item: Read more about Norinchukin here: https://bit.ly/2HDIrUS