Arizona pension system sees valuations falling in coming months

Arizona State Retirement System expects valuations to fall in the months ahead as fresh private marks start to roll in.

At the $51.18 billion system’s investment committee meeting on August 29, Arizona deputy chief investment officer Samer Ghaddar cited data from Preqin that showed buyout deal multiples at 9.8x for third-quarter results through July. These same figures were 12.6x in the second quarter of 2022 and 13.6x in the last quarter of 2021. Buyouts watched a webcast of this meeting.

“We expect private markets will keep on going down and valuations will contract further. We see activity slowing across both buying and selling, especially with selling and exits which are so dependent on IPOs,” Ghaddar said.

Ghaddar said the system’s investment staff has become more selective when making new commitments. “We’re looking at top tier managers only,” Ghaddar said.

Arizona allocated 12.5 of its portfolio to private equity at a value of $6.2 billion at the end of April.