Institutional investors are making big side moves; slow pension fund transactions

S&P Global Market Intelligence offers our top picks of global private equity news and more released throughout the week.

Institutional investors are coming to the secondary market to sell large stakes in limited partnerships as they focus on liquidity and rebalance their portfolios.

The California Public Employees Retirement System is in the market selling a $6 billion portfolio of fund interests, according to multiple reports. The New York State Teachers’ Retirement System sold a $2.6 billion portfolio in November last year, according to Preqin.

LPs are motivated to sell as fund managers quickly return to the market with new funds, often with larger initial targets than previous funds. Fifteen buyout fund managers each aim to raise at least $15 billion in 2022, according to Hamilton Lane, creating a “pressure cooker” environment for private equity fund managers and investors.

In addition, recent declines in the value of public market holdings and strong returns from private equity assets have created an imbalance in some institutional portfolios.

“Private equity typically lags behind in terms of returning from private to public values,” said Nigel Dawn, senior managing director and head of Evercore’s Private Capital Advisory Group. “It often takes several quarters to recover, and there is a period of time when they will be over-allocated” to private equity.

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GRAPH OF THE WEEK: transactions with pension funds slow in the first quarter

Pension fund sponsors participated in deals worth $11.41 billion in the first three months of 2022, a year-over-year decline of more than 21% for the period and the lowest quarterly total in at least a year.

⮞ Of the 25 disclosed transactions involving a pension fund in the first quarter, 16 had private equity involvement.

⮞ The largest deal was the $2.68 billion acquisition of Australian telecommunications provider Uniti Group Ltd. by a team of investors including Australian pension plan sponsor Nt-Comnwlth Super Corp.

FUNDRAISING AND OFFERS

* Apollo Global Management Inc. and Roku Inc. make a joint offer to acquire a minority stake in Starz, The Wall Street Journal reported, citing people familiar with the situation. Lions Gate Entertainment Corp.which bought Starz for $4.4 billion in 2016, is considering a sale or spinoff of the pay-TV and streaming service.

* Apollo completed its purchase of Griffin Capital Co. LLCthe US asset management business of .

* TPG Inc. is seeking to raise $3.5 billion for its second healthcare fund, TPG Healthcare Partners II LP, WSJ reported, citing people familiar with the matter. The private equity firm is reportedly targeting a combined total of $18.5 billion for the new healthcare fund and for TPG Partners IX LP.

* Advent International Corp. agreed to acquire a significant stake in a food service packaging and cleaning supplies company imperial dade of Bain Capital Pvt. SEC of shares.

ELSEWHERE IN THE INDUSTRY

* StepStone Group Inc. grossed $1.3 billion for StepStone Senior Corporate Lending IIwhich will invest in post-pandemic performing, senior secured and first lien corporate loans.

* Stonepeak Partners LP will acquire a minority stake in the private school operator Inspired Education Group in a deal valued at €1.0 billion.

* Health Care Roundtable Partners obtained 800 million dollars for Healthcare Partners VI LP Roundtablewhich will continue the private equity firm’s strategy of investing in healthcare companies.

* Lonsdale Capital Partners LLP added UK-based dental practice operator Todays Dental Group Ltd. to his wallet.

FOCUS ON: FINANCIAL SERVICES

* TowerBrook Capital Partners LP to acquire a UK-based installment finance service provider Premium Credit Ltd. of Cinven Ltd. in a transaction that could close in the second half of 2022.

* WestCap Management LLC led a Series C funding round that raised $115 million for the real estate capital platform Point Digital Finance Inc.

* Aquiline Capital Partners LLC raised $365 million for Aquiline II LP Technology Growth Fundwhich invests in financial technology, insurtech and related enterprise software and services.

Dolores W. Simon