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Ardian said to win process for historic $5 bln portfolio from Japan’s Norinchukin Bank

  • LP book was the largest ever on the secondary market
  • Ardian preempted an auction process
  • Portfolio includes an amount of unfunded commitments

Ardian, which is raising what could be the largest-ever secondaries fund, will acquire a roughly $5 billion portfolio of LP interests being shopped by Japan’s Norinchukin Bank, three sources told Buyouts.

The Paris shop emerged as the winner of a competitive process for the portfolio, sources said.

Several large firms looked over the portfolio, though the process was not a broad one because of the deal’s size, one source said. Only a handful of firms, as well as some sovereign funds and large pension pools, could realistically consider bidding for the portfolio.

Norinchukin was working with Greenhill Cogent on the sale.

At a total value of $4 billion to $5 billion, this could be the largest LP portfolio sale ever. But the portfolio contained a large amount of unfunded interests, sources said. This means Ardian would not have to fund those interests right away.

The portfolio is a mix of assets, including positions in megabuyout funds and real-assets funds, Buyouts reported.

Emma Murphy, a spokeswoman for Ardian, declined to comment.

Ardian is expected to bring in some of its LPs as co-investors on the deal, sources said.

The firm is raising its eighth secondaries program, targeting $12 billion for a commingled secondaries fund and $6 billion for co-investments, Secondaries Investor reported.

Norinchukin earlier this year sold a traditional LP portfolio in an about $1.4 billion deal to Lexington Partners, sources said. Why Norinchukin is selling out of so much of its private-market exposure is unclear. Contact information for Norinchukin could not be found.

Norinchukin Bank supports Japan’s fishing, agriculture and forestry industries. As of March 31, 2018, it had an about $11.5 billion alternative-investment portfolio, consisting of exposure to private equity, real estate, infrastructure and hedge funds, the website said.

“Ten years ago, it would have moved the market, and I think it would have sent shockwaves into the system,” one secondary-market buyer told Buyouts in a recent interview about $5 billion secondary deals.

“The market has grown in deal volume and capital available for deals, and we’re now at the level that deals like that have a place in today’s market. It’s noteworthy, but I don’t think it’s a game-changer.”

Other large LP-stake sales include AIG’s sale of a PE portfolio valued at about $2.3 billion last year to Ardian and Pinebridge, Secondaries Investor reported.

CPPIB acquired a portfolio valued at about $1.7 billion last year from Ontario Teachers’ Pension Plan, Buyouts reported.

Total secondary-market deal volume in 2018 came in around $75 billion, including real estate and infrastructure assets, a year-end report from UBS shows. Total PE secondary volume was estimated at $67 billion, UBS said.

Action Item: Read more about Norinchukin here: https://www.nochubank.or.jp/en/ir/valuereport/