As secondaries activity comes back, CPPIB shops $1bn-plus portfolio

Private equity secondaries activity is starting to ramp up after a months-long pause in the pandemic downturn, with GP-led deals leading the way.

Traditional limited partner portfolio sales are not expected to return to the market in a meaningful way until later in the year. This is because diverse fund portfolios, representing sometimes hundreds of underlying businesses, are tough to value in the uncertain environment.

Still, some portfolios with high-quality funds are able to trade in today’s market. This is the case with Canada Pension Plan Investment Board, which is shopping a large portfolio of private equity stakes that could total up to $2 billion, two people told Buyouts.

CPPIB did not respond to a request for comment Wednesday. Park Hill Group is working as secondaries adviser on the transaction.

The Canadian pension system has been a prolific seller of private equity. The system was notable as closing perhaps the last big LP portfolio sale before markets shut down in the pandemic. Ardian and Lexington Partners were buyers on a portfolio sale valued at about $1.2 billion that closed on March 31, Buyouts previously reported.

That prior portfolio contained funds from CVC Capital Partners, Blackstone Group and Apollo Global Management, Buyouts reported.

The new portfolio contains what sources described as high-quality funds.

CPPIB’s sale hits the market shortly after the system lost its head of secondaries, Michael Woolhouse, who left CPPIB to join TPG, where he will lead the creation of a secondary group with the firm, TPG said in a statement.

While most traditional LP portfolio sales activity is not expected to make a significant comeback until later this year, certain portfolios containing high-quality funds are trading at reasonable prices, sources said.

As well, some sellers may want to bring portfolios to market now before the anticipated flood of activity that is expected after Labor Day.

“There is an expectation of significant pick-up at the end of the year. Sellers and advisors are very aware that, even though there have been new funds readied and meaningful dry powder available, there is a limit in terms of what the universe of buyers can absorb in terms of transaction volume in a given quarter,” a secondaries buyer said.

Other large deals in market during the downturn include Ottawa Avenue Private Capital, an affiliate of the DeVos family office. HarbourVest Partners was lead buyer on the up to $2 billion deal in which Ottawa Avenue sold private equity stakes. The Ottawa Avenue portfolio also included what has been characterized as stakes in high-quality funds.

Also, Latin America-focused Southern Cross Group completed a restructuring on an older fund in a deal led by Intermediate Capital Group.

Update: This report was updated to remove the names of certain funds said to be included in the portfolio for sale.