In one of the largest sales of its kind by a U.S. pension fund, the State of Connecticut Retirement Plans & Trust Funds has sold stakes in several private equity funds to secondary firm Coller Capital, PE Week has learned.
Sources indicate that the deal – for an undisclosed amount – happened earlier this year and involved the state holdings in buyout firm Triumph Capital. All of the participants were contacted, but none were willing to comment on the transaction.
A source familiar with the deal says Connecticut’s sale is an indicator of things to come in the U.S. private equity market. The source says that state pension funds have not typically been large sellers on the secondary market, but they may soon become heavily involved.
“More pension funds and large corporate pension funds will need to sell limited partnership interests to provide a steady flow of liquidity,” says the source. “Statistics show that over 55% of municipal pensions for large metropolitan areas and states are under-funded on their 10-year projections. Private equity has been the fastest growing asset class in those portfolios.”
Connecticut’s sale of state holdings in Triumph is noteworthy considering Connecticut has had a checkered history with the firm.
Former Connecticut Treasurer Paul Silvester pleaded guilty to improper insider dealings with Triumph in 2003, after which the state sued Triumph for fraud. The allegations gained attention from the media in 1998, when Silvester committed $845 million from the state pension fund to alternative assets in his final three months in office, which he later admitted was to secure future employment for himself and his associates.
The state and the buyout firm settled the case out of court, with Triumph returning some of Connecticut’s committed capital. Silvester went to prison, where he remains.
Sources indicate that the Camelot Group acted as a strategic advisor in Connecticut’s secondary sale. Earlier this year, London-based Coller Capital was involved in another large secondary deal when the firm announced it had purchased the private equity holdings of financial advisor Abbey National. Coller reportedly paid an estimated $554 million to $646 million for the assets, in which Abbey had committed about $1.33 billion.
More recently, Coller struck a $90 million secondary deal with Dresdner Bank to spin out its Institutional Restructuring Unit, which is now operating independently as Annex Capital.
Email Matthew.Sheahan@thomson.com or Daniel.Primack@thomson.com