Limited Partners

When a CV asset goes bankrupt, if the restructuring plan calls for equity to be wiped out to make sure creditors are repaid, that includes CV investors and rolling LPs.

The institution wants to understand “how deep the private credit secondaries market is” after seeing stellar returns from PE secondaries, senior portfolio manager John Mogg said in a recent advisory council meeting.

LPs are exploring the use of advanced technologies such as AI to enhance workflows and aid investment decisions, but the human element remains key.

The $257bn pension has been seeking alternatives to secondaries sales to avoid taking large discounts in such transactions.

While there is certainly a host of alignment issues LPs would like to see resolved, a number of investors have adjusted their policies to invest in continuation vehicles.

The US pension’s investment committed noted the global secondaries market is a more intriguing opportunity after deal volume hit a record in the first half of this year.

Investors including Alaska Permanent, Caisse des Dépôts, Skandia, New York City Retirement Systems and TRS Texas share their views on how this market can be improved and how they are positioning themselves to take advantage of CVs.

Transfer agreements are seen as a $100,000 ‘copy & paste job’ by some and ‘complex legal contracts’ that law firms are losing money on by others.

Data from the consultant prepared for Teachers’ Retirement System of Louisiana shows the strategy still has room to grow.

Despite a couple of pulled-transaction anomalies, secondaries sales are still seen as a powerful tool for rebalancing portfolios.