PE HUB Wire Highlights, 11.16.18

Secondaries rounds out year with billion-dollar portfolio sales, San Francisco Equity Partners transitions from independent sponsor

Happy Friday!

Amazon will reap a $3 billion windfall from New York by moving its HQ2-(a) to Queens, which our fearless leadership believes is the deal of the century … this while the regional transit system is in near-collapse because of three inches of snow. Maybe Amazon can team up with Elon Musk to drill another tunnel from NJ to Midtown.

Hyperactivity: This entire week has been about secondaries deals. This side of the market is on fire in the closing weeks of the year as sellers wrap up sales of large portfolios before the close of 2018. Since August, buyers noted at least seven portfolios of $1 billion or more on the market. I hear that this will likely be a record year for $1 billion-plus portfolios.

The week started with news CPPIB bought a $1.7 billion portfolio from Ontario Teachers Pension Plan, possibly the biggest on the market right now. Interesting that CPPIB (Canada Pension Plan Investment Board) is out there competing right alongside the biggest secondary buyers in the market like Ardian, Lexington Partners and Goldman Sachs.

A few years ago some public institutions like sovereign funds in the Middle East made noise about becoming secondaries buyers and competing with traditional players. That move has never materialized — sovereign funds in Abu Dhabi and Singapore staffed up but have not become major secondary players. Instead, large institutions like sovereign funds, but also including public pension funds in the US, are more interested in taking a piece of large portfolio trades. Call these types of deals secondaries co-investments — which are likely easier than co-investing in a company, especially if the LP already knows the GP and is looking to boost exposure. Institutions that don’t have the staff to assess an M&A transaction in a timely manner can diligence a secondary trade a lot quicker.

What kind of appetite do LPs have for secondaries co-investing? Hit me up

Other deals: Meanwhile, other trades in the market included Florida SBA selling a portfolio valued at about $1.3 billion to Ardian; Goldman leading the acquisition of a portfolio valued at about $1.3 billion from CDPQ and Blackstone picking up an about $1 billion portfolio from LACERA.

And this is just traditional LP sales … throw in all the GP-led liquidity processes out there, (Secondaries Investor recently reported that Coller Capital is leading a process with TH Lee), and the market will likely hit another record volume year. I’ve heard estimates as high as the $60 billion and up range.


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