Kemnay Advisory Services, a single-family office, wants to sell a portfolio of private equity fund stakes valued at more than $1 billion, sources told Buyouts.
The LP portfolio sale comes amid severe public market volatility, which makes pricing underlying private assets hard in secondaries sales. Many secondaries professionals through pricing stability would come with March 31 performance marks, but the public markets continue to nosedive.
It remains to be seen if the Kemnay portfolio, like others in the volatile markets, will actually transact with sellers being asked to take potential steep discounts on some fund interests.
Exposure in the Kemnay portfolio includes TCV, which is among a handful of tech growth firms trading at a discount because of the recent public market volatility that has been especially hard on tech companies. Some buyers are meticulously excluding exposure to growth and VC in their deals to buy portfolios of LP interests in funds, sources told Buyouts.
“These are hard interests to sell in an environment where companies like Netflix are falling in the fashion it does,” according to a secondary market source. “I think portions of it will get done.”
No one from Kemnay responded to a comment request.
LP portfolio sales have picked up this year, with several large processes moving through the volatile markets, including a large expected sale from Washington State Investment Board. California Public Employees’ Retirement System has been running an up to $6 billion sale since last year.
LP portfolio sales are being spurred by a few factors, including the unrelenting private equity fundraising cycle. The pace of fundraising is causing many LPs to blow through their yearly allocation plans in the first half, leaving little left for commitments later in the year. Some LPs are using secondaries to free up liquidity to continue committing to funds.
As well, LPs are finding themselves approaching or breaching their private equity allocation policy limits, which is prompting some to sell. Though in the uncertain markets, pricing uncertainty may cause some sellers to avoid a sale for now while they wait for markets to stabilize.