JPMorgan seeks $500m for recharged secondaries strategy

JPMorgan is seeking $500 million for its first secondaries offering since 2016.

Allocators have increased their interest in secondaries funds as LPs and GPs alike need liquidity in the slow exit environment. This has prompted new secondaries funds to enter the market.

JPMorgan’s PEG Secondary Portfolio (PSP) is looking to raise $500 million, according to board documents from the Vermont Pension Investment Commission. Buyouts reviewed the documents, which came via a presentation from the system’s consultant RVK.

Vermont committed $25 million to PSP.

JPMorgan has invested in secondaries since 2008, according to RVK. These have come through three PEG Secondary Private Equity Investors (PEG) funds, the last of which closed in 2016 after raising $1.16 billion, according to Buyouts data.

“They’ve not raised a fund in a number of years, so they’re launching this as a new strategy,” said a source familiar with PSP.

Between 60 percent and 80 percent of PSP’s portfolio is expected to come from LP portfolio sales, RVK said. PSP will also invest in continuation vehicles and seasoned primaries.

PSP’s primary focus will be on US and European mid-market LBOs but will also include venture capital, growth equity and opportunistic interests.

RVK added that PSP will not use any leverage beyond subscription lines of credit.

PSP also has a slight shift in strategy from JP Morgan’s three previous secondaries funds, according to RVK. The new strategy will not allow for purchases of direct growth equity or energy investments, which were permitted in the three previous PEG funds.

The three PEG funds have earned a 17 percent net IRR and 1.6x net multiple, RVK said.

A new team previously uninvolved with the three PEG funds will manage PSP, according to a source. Details about who specifically managed the three previous PEG funds were not available.

RVK said PSP will fall under the umbrella of JP Morgan’s Private Equity Group, which is co-headed Steven Catherwood and Ashmi Mehrotra.

Both have been with the group since 2003, according to RVK’s presentation.

JPMorgan declined to comment for this story.