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Washington uses secondaries to expand Bridgepoint exposure

  • Washington purchases $35 mln stake from Ardian
  • $104.9 bln pension rarely taps secondary market
  • Also commits more than $800 mln to PE

The Washington State Investment Board bought a $35 million stake in Bridgepoint’s fourth flagship fund on the secondary market, said Washington spokesman Chris Phillips.

Washington purchased the stake from secondary market specialist Ardian, which recently closed its seventh secondary fund on $10.8 billion. The transaction was priced at par as of a June 30, 2015 valuation.

Washington’s new Bridgepoint stake was part of a 150 million euros ($168.4 million) fund interest Ardian acquired on Dec. 31, Phillips wrote in an email.

Washington’s investment staff officially notified the $104.9 billion retirement system’s board about the secondary deal at its April 21 meeting, Phillips said in an interview. The retirement system’s investment policy provides Executive Director Theresa Whitmarsh the authority to invest up to $100 million on the secondary market each year, though it rarely does so.

“We’re not a big player or a regular participant,” Phillips said. “We’ve done maybe a handful of purchases in the last 15 years. It usually involves the fund that we’re already invested in.”

The retirement system is a limited partner in Bridgepoint’s third, fourth and fifth flagship funds, according to a recent private equity performance report. The investment board committed a little less than $200 million to Bridgepoint IV in 2008. The commitment netted a 1.4x multiple and 10.22 percent internal rate of return through Sept. 30.

In addition to its secondary acquisition, the investment board also approved more than $800 million of new commitments to private equity and tangible assets funds, according to Phillips. The commitments remain subject to final negotiation and due diligence.

Washington’s largest commitment, for up to 275 million euros ($308 million), went to the Sixth Cinven Fund. Cinven’s latest flagship fund is targeting 5.5 billion euros with a 7 billion euro hard cap for investments in European buyout funds. The retirement system also committed up to $250 million to Apax Partners ninth global buyout fund, which is targeting $7.5 billion with an $8.5 billion cap.

Washington will likely be the largest LP in a new special opportunities fund managed by Menlo Ventures. The retirement system committed $150 million to the fund, which is targeting $200 million to $250 million, Phillips wrote.

Through its tangible assets allocation, Washington committed $125 million to Warwick Partners III, which will invest in upstream energy investments in non-operating oil and gas wells in the U.S., Phillips wrote.

Washington valued its private equity portfolio at $17.6 billion as of Sept. 30, according to its performance report. The portfolio netted a 13.13 percent IRR and 1.5x multiple since inception.

Action Item: For more information about Washington, visit www.sib.wa.gov