Target: Ohio Bureau of Workers’ Compensation

Total commitments: $800 million

Funded commitments: $400 million

Market value: $366 million

Sample GPs: Carlyle Group, HarbourVest Partners, Invesco Private Capital, Primus Venture Partners, Thayer Capital Partners

Torn my scandal and troubled by disclosure controversy, the Ohio Bureau of Workers’ Compensation (OBWC) has taken steps to sell its private equity portfolio on the secondary market, according to several reports. At least one report quoted a bureau spokesman attribute the move to private equity’s incompatibility with the bureau’s business model.

OBWC, which holds approximately $16 billion in assets, plans to issue a request for information (RFI) regarding selling its private equity holdings on the secondary market. OBWC’s private equity total commitments stand at more than $800 million with about half of those being invested. The current market value of the assets given was $366 million.

OBWC ran afoul of many GPs when it threatened to release a report that includes portfolio company valuations and methodology notes for its 68 private equity funds. The report was originally prompted by an ongoing Ohio political scandal known as “Coingate”, in which OBWC monies were invested-and lost-in a rare coins scheme. One result-in addition to resignations and likely prison sentences-was that OBWC retained Chicago advisory firm Ennis Knupp & Associates to formally review the valuations of all OBWC private equity funds.

At the same time, the bureau began an effort to streamline its costs and is currently the subject of a study by advisor Wilshire Associates. The results of that study are due in June, but at least one official has said OBWC lacks sufficient staff to properly manage a large private equity portfolio.

OBWC GPs include Carlyle Group, Castle Harlan, HarbourVest Partners, Lexington Partners, Invesco Private Capital, Pharos Capital, Primus Venture Partners, TCW/Crescent Mezzanine, Thayer Capital Partners and Wind Point Partners.

OBWC would be entering the secondary market on the heels of the California Public Employees’ Retirement System (CalPERS), which is considering a sell-off of private equity partnerships to tune of about $3 billion (see Buyouts, Apr. 17, 2006). Such a large amount of assets going on sale would send secondary buyers vying for pieces of the portfolio and would encourage other large LPs to follow suit. At the end of March, CalPERS issued two requests for information (RFI) as part of its strategic review that will see the $200 billion pension system reduce its directly held private equity fund investments significantly. One RFI asks interested groups to submit plans for managing partnerships in its portfolio. The other RFI asks for respondents to submit plans to help create new investment vehicles (NIVs). Both plans would serve CalPERS’ $28 billion Alternative Investment Management (AIM) program. — D.P./M.S.