Some LPs not in need of liquidity use the secondaries market as a way to tweak their portfolio's construction, which is the case with IMCO.
While LP sales slowed around spring, activity has picked up and sources expect inventory to increase as the market moves into the third quarter.
The country’s largest public pension will pursue both private equity and private credit continuation fund opportunities, according to investment policy committee member Sam Y Chung.
Such alternatives could be better options than selling fund stakes if LPs must take massive discounts, according to the $251bn pension's senior investment officer John Bradley.
As part of the system’s policy established in 2022, the pension has been building exposure to areas of private equity it may have skipped in the past such as smaller funds and growth-focused GPs.
Some LPs have explored ways to share in the future profits of an asset sold out of a CV shortly after the secondaries process closes.
The pension giant is understood to be looking to offload LP stakes valued between $2bn and just over $3bn.
A quick exit out of a continuation fund can also raise questions about whether a GP knew about a potential exit even while pursuing the continuation fund, or if the offer came out of the blue.
Fund of funds sales represented the majority of LP transactions by asset managers last year, according to a recent full-year 2023 volume report.
Raymond James, Evercore, Jefferies and Campbell Lutyens are in the wings for the pension fund’s secondaries sales route.