CPPIB shops $2bn-plus portfolio as secondaries pricing wobbles

One of the industry’s most active limited partners, Canada Pension Plan Investment Board, is selling a big portfolio of stakes in private equity funds, including exposure in Apollo Global Management, sources told Buyouts.

The portfolio, with net asset value of about $2.2 billion, is live in the market now, sources said. It’s one of several large, traditional LP portfolios sellers have been trying to unload since last year, when pricing was rich and buyers were eager to diversify beyond concentrated asset deals.

Secondaries pricing is changing with the public market volatility, especially with tech stocks experiencing steep losses. Pricing in the private markets often follows public market marks lagging by a quarter or more.

Some portfolios that hit the market this year, pegged to valuations as of September 30, may take longer than expected to sell, or may not transact as buyers look for pricing that reflects the reality of market turmoil. The outlook is likely to grow more uncertain as developed nations seek to inflict maximum financial pain on Russia for its invasion of Ukraine.

December 31 marks that would better reflect the changing market dynamics – but still be fairly outdated considering rapid changes in the geopolitical outlook – won’t be set until around April or May.

CPPIB is working with Evercore on the sale, one of the sources said. Along with Apollo, funds in the portfolio are managed by KKR, Ares Management, Veritas, Insight Partners and Lion Capital, the source said.

A CPPIB spokesperson declined to comment. CPPIB was selling a large portfolio in the second half of 2020, one of the first traditional LP portfolios to hit the market after a pause in secondaries activity in the market shut down in the early days of the pandemic.

The system also sold a roughly $1.2 billion portfolio just as the pandemic closed markets in the early months of 2020. Ardian was lead investor in the deal, while Lexington Partners also participated. The portfolio included funds from CVC Capital, Blackstone Group and Apollo Global Management, Buyouts previously reported.

Despite the market turmoil, some buyers will still move forward off of value marks considered outdated if they already have relationships with the GPs and a clear view of the underlying assets.

Secondaries professionals are watching to see if any of the big offerings on the market will have to be repriced, or if sellers decide to pull the sales until pricing becomes more certain.

Pricing as of the fourth quarter came in around 97 percent of net asset value, according to Jefferies’ full-year volume report. LP sellers have been hitting the market amid the rich pricing and buyer desire for more diversification. CalPERS, the nation’s largest public pension fund, is shopping a $6 billion portfolio of stakes in PE funds.