Ventura County Employees’ Retirement Association has done well investing in secondaries, according to presentations from the two firms through which it accesses the niche market.
The discussion on secondaries comes as the once-niche market has exploded into the mainstream, with a record ~$130 billion in transactional activity in 2021. Most LPs have made routine use of secondaries as a way to manage their portfolios.
Ventura accesses secondaries through HarbourVest Partners and Pantheon. The system committed $167.5 million to HarbourVest’s Dover VII, IX and X funds, and $115 million across four Pantheon funds.
According to its presentation, Pantheon’s four funds have returned 16.8 percent to date. The earliest fund, PGSF IV, has a vintage date of 2010. The latest, PGSF VII, has a vintage of 2021.
Pantheon’s secondaries tend to focus on small and medium buyout, as well as growth equity funds, funds with assets in North America and Europe.
Pantheon also focuses on investing in single asset secondaries. Partner Rudy Scarpa detailed a recent transaction the firm made in this sector, stating that it invested into a temporary staffing company that supports digital marketing campaigns into its seventh fund.
“What this company does is connects companies that want to engage in online marketing campaigns with people who can help them who work in creative fields or are marketing professionals. We’re seeing individuals who want more control over their hours. This temporary staffing business will match folks that need their talent,” Scarpa said at the meeting.
The HarbourVest presentation also showed strong returns in its three secondaries funds, with the Dover X Vintage 2012 fund returning 20.9 percent, Dover IX Vintage 2016 returning 35 percent and the latest fund, which closed in 2020, having a return of 87.9 percent to date, which is expected to drop over time.
“As we approach our extension periods, we have a good idea where these portfolios will end up. We’ve taken a very consistent approach. We’ve invested in just over 3,000 companies that provide significant levels of diversification,” said David Krauser, a principal at HarbourVest, about its three secondaries funds.