The teachers’ pension portfolio is among several that have moved through the market this year, helping to drive secondaries volume even as activity on the GP-led side of the market remained muted.
One of the biggest portfolios this year, NYSTRS’ process was an example of a seller shopping a large offering and letting buyers pick and choose their favorites. NYSTRS has been a steady seller over the last few years.
HarbourVest picked up a portfolio in the range of $2 billion to $3 billion, sources said. Mozaic Capital worked as adviser on the process. Lexington Partners also picked up a smaller part of the portfolio, sources said. Spokespeople for NYSTRS, HarbourVest and Lexington declined to comment.
The portfolio comprised about $4.5 billion of net asset value, and another $1.5 billion of unfunded commitments, Buyouts previously reported. Funds in the portfolio included those from Hellman & Friedman, Cinven and Abry, among others, Buyouts reported.
The system targets 9 percent to private equity and had a 10.9 percent actual allocation as of March 31, according to Buyouts data. The system has used secondaries sales as a way to rebalance the portfolio and relieve overexposure.
The system has been a regular secondaries seller, working with Mozaic on recent sales. It moved a portfolio valued at about $2.6 billion in 2021-2022, though it’s not clear how much of that portfolio sold. It also ran a sale in 2019.
Many LPs have been eager to sell but have held back amid a large gap between buyer and seller expectations. Earlier this year, Kaiser Permanente sold a $6 billion portfolio. Other sellers this year have included Norinchukin Bank, Cathay Life Insurance, CPPIB and Caisse de dépôt et placement du Québec.
Pricing on LP portfolio sales has generally included discounts to net asset value of between 10-20 percent, though that has recently strengthened, especially for buyouts funds.
Last year, average pricing for LP sales was 81 percent of net asset value, an 1,100 basis-point decline from 2021, according to Jefferies’ 2022 secondary volume survey. As of the first quarter, pricing for buyout funds was hovering around 85-90 percent of NAV, according to PJT Park Hill.
LP sales continue to lead volume with an estimated ~$25 billion in deals out of a total ~$43 billion, accounting for about 60 percent of total volume, according to Lazard’s interim volume report. Such deals made up 49 percent of activity in the first half of last year, affiliate title Secondaries Investor reported.