Still Climbing
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www.secondariesinvestor.com Still climbing News compendium Contents news headlines Q&a Welcome Montana puts PE Ardian: we are not Dear reader, funds up for sale p. 3 in a race to invest p. 9 Benoit Verbrugghe, Managing Partner, Ardian Welcome to our special Secondaries Sacramento launches Investor compendium. secondaries infra FoF p. 3 The ‘fantastic economics’ of Regular visitors to our website will Volcker to be ‘acute’ driver secondaries advisory p. 10 know we offer a unique daily mix of stories, often providing new details and of secondaries dealflow p. 3 Joseph Marks, Managing Director, Capital Dynamics key insights on market developments. We track the institutions, funds and Adrian Millan, Managing Director, Park Hill Group Shackleton acquires transactions shaping the secondaries Todd Miller, Managing Director,Cogent Partners Sigma VC fund assets p. 4 markets within private equity, real Robert Shanfield, Head of Secondaries, estate, infrastructure and private debt. Landmark Partners Infrastructure secondaries David Tegeler, Partner, Proskauer We also showcase hand-selected, picking up p. 4 David Wachter, Founding Partner, W Capital third party commentary and research from industry thought leaders on Discounts narrow for US a weekly basis. buyout funds p. 5 commentary This compendium collates some of the NASDAQ latest to launch most interesting – and most popular – items we’ve published recently, giving secondaries platform p. 6 Secondaries posturing p. 12 you and informative snapshot of today’s Richard Lichter, Chief Executive Officer, secondaries markets. Corporate Partners to Newbury Partners restructure second fund p. 6 We hope you enjoy the collection and Institutional innovation p. 12 encourage you to visit our website Landmark decision for Neil Campbell, Global Head of Alternative for more. Investments, Tullet Prebon’s Louisiana firefighters p. 6 Best wishes, Small focus, big ambition p. 13 Northleaf secondaries Greg Getschow, Portfolio Manager, JPEL’s fund closes on $255m p. 6 The order of things p. 13 Australian LP to sell Massimiliano Saccone, Founder, Synthetic chelsea Stevenson $1bn in PE stakes p. 7 Private Capital Editor – Secondaries Investor Rede Partners grows Emerging market secondaries capabilities p. 7 secondaries p. 14 Cristina Alcaide, Valerie Chen, Amit Mahajan PineBridge Investments Wellcome Trust to sell $750m venture stakes p. 7 Ironbridge progresses with $1.5bn restructuring p. 8 Boost to Morgan Stanley real estate fund p. 8 Allianz ponders portfolio sales into the contents listing p. 8 2 SecondarieS inveStor | Still Climbing’ newS Compendium News headlines Montana puts Pe funds up for sale “We have been focusing on infra and energy because of the better risk-adjusted returns and opportunities we are finding” Fund interests from managers including Scott Chan, Chief Investment Officer, SCERS energy specialist First Reserve and mid- market firm Madison Dearborn are among the stakes that have been put up for sale by the Montana Board of Investments Real Assets fund, according to a filing with 2013, SCERS had allocated 21.8 percent (MBOI). More than 40 offers have come the Securities and Exchange Commission. of its $7.59 billion investment portfolio to in for the eight stakes from four GPs, alternative investments with 0.1 percent according to recent meeting minutes. The pension system has committed $100 dedicated to private real assets. million to the fund of funds, SCERS’ The US public pension aims to take chief investment officer Scott Chan told SCERS’ target allocations for alternatives advantage of “the current valuation Secondaries Investor’s sister publication are 10 percent for hedge funds, 15 percent perspective and the good market Infrastructure Investor. The fund will real assets, 10 percent private equity and 0 timing and strong demand and ample focus on secondaries opportunities for to 5 percent opportunities. dry powder among secondary funds”, infrastructure and energy investments, and according to comments from chief SCERS expects to deploy the capital within Pantheon is a fund of funds manager that investment officer Clifford Sheets, as three to five years. invests on behalf of over 400 institutional documented in the minutes. investors, including public and private When asked if the separate account would pension plans, insurance companies, Sheets added that the funds chosen for have a geographic focus, Chan said: “Part endowments and foundations. Its sale were not “troubled” but were funds of it depends on the type of partnerships investment solutions include customised that the LP had decided not to pursue an that are available in the secondary market separate account programmes, regional ongoing “strategic relationship” with. The –generally those types of assets are global primary fund programmes, secondaries, co- names of other fund managers have not in nature – but I think it’ll be a bit more investment and infrastructure programmes. been disclosed; meeting minutes note the skewed toward [the] domestic [market].” total NAV of the funds was $127 million As of 31 December 2013, Pantheon as of 30 September 2013. The fund will invest in multiple funds but had over $28 billion in assets under may also make direct investments in assets management. In addition to its London MBOI estimates that its private equity through opportunistic co-investments. As headquarters, the firm also has offices in allocation will be 10.4 percent once the for the energy investments, the mandate San Francisco, New York and Hong Kong. sale completes. It said that the decision covers oil and gas exploration and to sell some of its private equity exposure production, transportation and storage and was not to change the allocation of power, Pantheon confirmed. volcker to be ‘acute’ driver of private equity, but rather to protect it secondaries dealflow should stock markets fall. MBOI said SCERS, which has sole and exclusive such a decline would probably result in fiduciary responsibility over the assets Secondaries dealflow is expected to be an increase in the weight of its allocation of the entire retirement system, has boosted this year as more banks respond towards private equity. not carved out a separate category for to incoming US regulation by disposing infrastructure. Instead, infrastructure falls of assets, according to private equity- It was unclear at press time whether under private real assets, which is a subset focused lawyers. MBOI had already sold all or some of of real assets, an asset class the pension the fund stakes. “Last week proceeds fund established in late 2011. “The final adoption of the Volcker Rule of $60 million were received and an has been a wake-up call for many of additional $30 million is due at the end of In addition to infrastructure, private the banks to start getting serious about June,” according to the meeting minutes, real assets – which has a target allocation disposing of their private primary assets,” which noted $36 million from a separate of 6 percent – also includes energy, said Michael Wolitzer, a New York-based secondaries sale was expected at the end timber, agriculture and other assets, partner specialising in fund formation of April. but there is no specific allocation for at law firm Simpson Thacher & Bartlett. each, Chan explained. “They now face lot of concrete events with concrete deadlines.” Sacramento launches secondaries “We have been focusing on infra and infra FoF energy because of the better risk-adjusted The rule’s final form was published in returns and opportunities we are finding,” December and now the most important The Sacramento County Employees’ he said. deadline is 21 July 2015. That’s the date Retirement System (SCERS) has hired by which banks must dispose of all private private equity firm Pantheon Ventures to According to Infrastructure Investor’s equity assets they are barred from holding manage its Secondary Infrastructure and Research & Analytics, as of 31 December under the terms of the Volcker Rule, a SecondarieS inveStor | Still Climbing’ newS Compendium 3 News headlines section of the US’ 2010 Dodd-Frank Act. Garrison. Still, though, he said, “it will Shackleton has opened a new office The rule restricts banks from trading off be very challenging for a US bank to in Edinburgh to support the portfolio their own accounts as well as limiting their maintain a significant amount of private companies, according to the statement. investments in private investment funds to equity investment”. no more than 3 percent of any one fund’s Publicly listed Sigma previously said it capital. The regulations will apply to US Masotti also warned of “all the indirect planned to withdraw from managing banks and to many non-US banks that consequences of Volcker that will keep venture capital funds and would retain an have a US presence. lawyers busy as they restructure some of LP stake after transferring the funds’ assets their clients’ investment interests”. For to Shackleton. When it comes to factors that will generate example, some investors may be treated dealflow in the (currently booming) as banking institutions by Volcker due The STVF raised £17 million ($28 million, secondaries market, “in the next 12 to 18 to their investment holdings in banks, he €21 million) in 2012 with limited partner months Volcker is going to be the most said. Insiders say this may apply to some contributions from the Bank of Scotland acute driver,” said Wolitzer. “I think 2014 sovereign wealth funds. and the Scottish Widows Investment will be a very active year”. Partnership, while the SIF raised £6 million All of this is expected to fuel more in 2008, according to data from private Goldman Sachs earlier this year noted secondaries dealflow. But given many equity and venture capital database PSEPS. it had set up a Volcker ‘implementation banks have already started divesting their team’, while other banks such as HSBC, private equity holdings, “It won’t be like Shackleton Secondaries II closed on £25 Unicredit, JPMorgan and Bank of America a snake swallowing a cow”, says Simpson million in 2008.