Canadian Pension Said to Shop $1.5 Billion in Fund Stakes

The Public Sector Pension Investment Board, one of Canada’s largest pension-plan managers, is returning to the secondary market to shop about $1.5 billion in private-equity fund stakes, said two people with knowledge of the matter.

The portfolio for sale is made up of concentrated positions in large buyout funds managed by private investment firms including Apollo Global Management LLC and Apax Partners LLP, according to the people, who asked not to be identified because the information isn’t public.

Cogent Partners, an advisory firm based in New York, is managing the sale. Mark Boutet, a spokesman for Montreal-based PSP Investments, declined to comment.

PSP Investments, with C$64.5 billion ($64.7 billion) in assets under management as of March 31, is increasingly focusing on making co-investments alongside private-equity firms or investing directly in deals, while being more selective about new fund commitments. The pension manager brought a similar-size portfolio to market in 2010, ultimately selling stakes in a number of mega-buyout funds for more than C$800 million, according to its fiscal 2011 annual report.

Direct and co-investments accounted for 34 percent of assets in the private-equity portfolio as of March 31, compared with 32 percent at the end of the previous fiscal year, the plan’s 2012 annual report shows.

North American pension plans are accessing the secondary market, where investors sell their stakes in private-equity funds, to rebalance their holdings. California Public Employees’ Retirement System and State of Wisconsin Investment Board are both seeking to sell fund stakes to reduce the number of managers they use and concentrate bets with the best performers, people familiar with those pension plans said earlier this year.

PSP invests on behalf of the Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Private equity accounted for 10 percent of the portfolio as of March 31.

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