Norinchukin Bank, the Japanese fishing and agriculture industry bank, is shopping a large portfolio of private equity fund stakes on the secondaries market, sources told Buyouts.
The portfolio is among several large trades that have hit the market this year and that are helping to drive LP secondaries inventory to more than $20 billion. The question remains whether these deals will trade and at what levels, given that pricing discrepancies remain between buyers and sellers.
Secondaries market professionals believe that as private equity valuation marks for the fourth quarter begin to become clearer, LP sellers will become more comfortable selling. The expectation is that a flood of LP secondaries will hit the market, perhaps starting in Q2 and over the summer.
Norinchukin is working with Greenhill & Co on the sale, which is around $1.5 billion or more in size, sources said. The portfolio could be larger, one source pointed out, though it’s not clear by how much. No one from Norinchukin Bank returned a comment request this week.
The bank supports Japan’s fishing, agriculture and forestry industries. Norinchukin is no stranger to secondaries sales. The bank held one of the largest ever PE secondaries sales in 2019, when it brought a $5 billion portfolio to market. Ardian was the buyer on that process, Buyouts reported at the time.
Norinchukin also sold about $1.4 billion of LP stakes to Lexington Partners earlier that year, Buyouts reported. The bank holds the private equity fund stakes on its balance sheet, a source said.
Norinchukin’s process is in the market along with a massive, $6 billion sale from Kaiser Permanente. Secondaries professionals believe the sales could open the gates for other sellers to bring offerings to the market over the next few months.
LP sales led the way last year, with secondaries volume estimated at around $106 billion, according to Campbell Lutyens’ 2022 market report. LP deals took the majority of market volume, with around 49 percent of the total, the report said.
Pricing remains a challenge with a still-significant gap between buyer and seller expectations. However, as Q4 marks come in providing further clarification on valuations, sellers are expected to be more confident in accepting discounts.
“Once the sellers feel like pricing has stabilized, we’ll see a whole wave of selling,” a secondaries buyer said. “And I don’t mean par pricing; if they can get deals done in the mid-80s, they’ll do it. There’s no lack of deals out there.”
Many transactions are waiting for Q4 marks, but already the market is buzzing with portfolios, the buyer said.