General Motors’ pension fund is selling a portfolio of private equity fund stakes that could total up to $1 billion or more, sources told Buyouts.
The LP portfolio sale is among a handful that have been keeping the market busy, despite pricing uncertainties and continual hesitation among buyers and sellers to close deals. LP sales were expected to kick off a resumption of robust secondaries activity after a slowdown late last year, but external factors like the collapse of Silicon Valley Bank have continued to keep activity muted.
GM is working with Evercore on the sale, which has been in the market since late last year, one of the sources said. The status of the sale, and whether a buyer or buyers are lined up, is not clear. A GM spokesperson declined to comment.
The fund stakes are being sold through Performance Equity Management, which runs private equity on behalf of GM’s pension fund, a source said.
GM defined benefit pension had a 23 percent target allocation to a US-focused alternatives bucket that includes private equity, real estate and hedge funds as of December 31, 2022, according to GM’s annual report.
The fair value of the pension’s US private equity and debt investments was about $4 billion as of December 31, the annual report said. That was down from about $4.4 billion a year earlier, the report said.
The GM sale is among a handful of large LP portfolio sales in the market now, including one of up to $6 billion from Kaiser Permanente. The Kaiser sale is mostly completed, with more than $5 billion trading and another smaller sale being completed, Buyouts recently reported. Other sellers include Norinchukin Bank and Cathay Life Insurance Co.
LP sales led secondaries activity in the first quarter, taking about 60 percent of volume share, according to PJT Park Hill’s first quarter analysis report. “Successful transactions in the quarter involved carefully crafted portfolios, realistic valuation/pricing expectations and flexibility for structured solutions, which the team expects will continue this year,” the report said.
Pricing strengthened in the quarter compared with year-end 2022, improving 200 to 400 basis points, coming in around 85 percent to 90 percent of NAV, driven by improvement in macroeconomic sentiment and buyers with uncalled capital looking for deals, the report said.
Secondaries investors, mostly large shops, hold around $170 billion of dry powder as of the first quarter, the report found, for around $150 billion of deal volume.