LP Sales

A fundamental shift in capital markets is forcing many institutional investors to rethink their portfolios, creating a perfect storm for the resurgence of investor-led secondaries.

LP sales were expected to kick off a resumption of robust secondaries activity after a slowdown late last year, with external factors such as the collapse of Silicon Valley Bank keeping activity muted.

PEI’s annual investor survey indicates that LPs aren’t rushing to exit every deal, but they do expect third-party valuations.

LP portfolios accounted for close to half of the roughly $106bn in volume last year, according to the advisory firm and placement agent's 2023 Secondary Market Overview.

Investment officer Pushpam Jain says the pension’s exposure to commodities alerted it to opportunities in farmland markets it had tracked since 2018, which ultimately led to more than $500m in TIAA secondaries deals.

The 2018-vintage Global Growth Fund III has invested in companies including SHEIN, Bytedance and crypto exchange FTX.

The LP portfolio sale was among a slew of such deals launched since last year that managed to close despite pricing uncertainty and hesitation among LPs to sell at discounts.

Buyers are increasingly splitting out their fund strategies as institutional investors seek specific risk/reward categories for secondaries.

Some LPs are on a three-year waiting list to formally transfer fund interests off their books – an issue that could grow as overallocation issues persist.

Recent activity suggests buyers may be purposefully baking in more headroom as macroeconomic and market conditions remain challenging, according to data from Palico.