Montana unloads Summit, TA funds on secondary market

  • Secondary sale nets $26 mln in proceeds
  • Montana previously sold eight PE fund stakes in 2014
  • $10 bln pension inks three commitments to PE

Montana Board of Investments tapped the secondary market for a second time in June, netting $26.2 million in proceeds by selling $30 million in private equity fund commitments.

The sale included a $20 million stake in Summit Partners’ eighth growth equity fund and a $10 million allocation to TA Associates’ 11th flagship fund, Montana’s August meeting materials show. The fund stakes were Montana’s only commitments with the firms.

Montana’s holdings in Summit Partners Growth Equity Fund VIII were valued at $16.9 million as of March 31, board documents say. The fund notched a 14.7 percent internal rate of return as of that date, which puts Fund VIII among the top quartile of U.S. funds from similar vintages, according to Cambridge Associates.

Its stake in TA XI was valued at $10.3 million as of the same date. The vehicle netted a 19.3 percent IRR, falling in Cambridge Associates’ second quartile for U.S. funds.

Montana first tapped the secondary market in 2014 when it sold its stakes in eight partnerships, including First Reserve and Madison Dearborn funds, according to Board of Investments documents.

At the time, former Chief Investment Officer Clifford Sheets said staff chose funds based on several factors, picking vehicles that would be “readily received by the market” and GP relationships Montana did not expect to continue.

Why Montana chose to sell its Summit and TA Associates commitments is unclear. Montana and the firms couldn’t immediately be reached for comment.

In addition to disclosing its secondary sale, Montana staff released information about three new commitments to PE funds.

Montana committed $35 million to Kinderhook Capital Fund V, a $750 million fund Kinderhook Industries closed in June. The retirement system also allocated $30 million to Orchard Landmark II, a direct lending fund managed by OCP Asia, and $20 million to Warwick Energy Group’s third flagship fund.

Montana Board of Investments oversees $10 billion of retirement-system assets. Since inception, Montana’s $1.1 billion PE portfolio netted a 1.5x multiple and 12.3 percent IRR as of March 31.

Action Item: More about Montana Board of Investments: