Britain’s Universities Superannuation Scheme has sold private equity stakes worth some 640 million pounds ($917 million) to French fund manager Ardian, the latest pension fund to take more control of such investments.
The transaction, comprising USS’s stake in 13 private equity funds, was done on the “secondary market”, which allows investors in private equity funds, or limited partners (LPs), to sell their holdings to other managers, usually in secret deals.
Geoffrey Geiger, head of private equity at USS, said in a statement that the deal reflected the fund’s shift towards more direct investment.
Pension funds have been shifting towards direct investment for years, either co-investing with a buyout firm or buying companies by themselves. Such deals allow them to sidestep the fees that come with investing in a private equity fund.
The secondary market has historically allowed funds to sell off troubled assets, usually at sizeable discounts, although some portfolios have been bought at a premium.
The market has been growing, hitting a record $42 billion in 2014, according to data provider Preqin.
Secondary managers such as Ardian, which raised $9 billion in 2014 to target secondary buyouts, have been raising funds targeting such investments.
The French group is the third-largest player in the secondary market, behind Lexington Partners and Coller Capital, according to Preqin.
USS, which was advised by Evercore on the sale, said selling an interest in a fund would not preclude it from investing in that fund in the future