CDPQ closes sale of PE portfolio to Ardian for nearly $3bn

Traditional LP portfolio sales came back in a big way in the second half of 2021 as buyers sought diversity away from the concentrated deals they made earlier in the year.

Canadian pension system Caisse de dépôt et placement du Québec sold a nearly $3 billion portfolio of private equity fund stakes to Ardian, sources told Buyouts.

The transaction, one of the largest traditional LP portfolio sales, was among a slew of such transactions that helped drive total secondaries volume to more than $130 billion. Traditional LP portfolio sales came back in a big way in the second half of 2021 as buyers sought diversity away from the concentrated deals they made earlier in the year.

Sellers have also been enticed to sell amid rich pricing, which, for buyout funds, reached 97 percent of net asset value, according to a recent survey from Jefferies.

Many large sellers like CDPQ also have come to market to generate capital and free up space for new allocations and coinvesting. LPs are facing a flood of re-ups from established managers, and need to make allocation space to get into new funds.

“For every $1 of capital to invest [LPs] have $2 to $3 coming through the door [in re-ups],” a source said.

CDPQ managed about $64.3 billion in private equity assets as of Dec. 31, 2020, the system said, which accounted for about 17.8 percent of the system’s total portfolio. More than 75 percent of the portfolio was in direct investments, CDPQ said on its website.

It’s not clear which funds were in the portfolio. CDPQ sold a $1.3 billion private equity portfolio in 2018 to an investor group led by Goldman Sachs. A spokesperson for CDPQ declined to comment.

Only a handful of buyers can snap up such a large portfolio, but CDPQ was looking for a single buyer transaction, sources said. The CDPQ deal was part of Ardian’s $15 billion of activity in 2021, sources said.

The CDPQ transaction was among numerous LP portfolios to hit the market. California Public Employees’ Retirement System is shopping an up to $6 billion portfolio of PE stakes in what would be the largest ever secondaries sale. Sources speculate only a piece of the portfolio will actually get sold.

Other sellers on the market include Shell’s corporate pension, which is shopping an about $1.3 billion portfolio; and Dutch pension administrator APG which is shopping a portfolio of around €1.5 billion but that could total more than €2 billion.

In 2021, GP-led secondaries deals like single-asset continuation funds represented about 52 percent of the $132 billion in total estimated activity, according to Jefferies full-year secondaries volume report, published this week. Traditional LP volume was $64 billion in 2021, representing a 156 percent increase from 2020, Jefferies said.

The sales have come amid an environment of rich pricing, which generally helps convince institutions to move forward with contemplated rebalancing. Pricing for buyout funds hovered around 97 percent of net asset value, Jefferies said.