New York City pension plans sell private equity portfolio

New York City Retirement Systems sold a portfolio representing $976 million in original commitments on the secondary market, said Barry Miller, head of private equity for city Comptroller John Liu, who oversees the systems.

The portfolio is being sold in two roughly equal parts — a bundle of limited partnership interests from Clayton Dubilier & Rice, Silver Lake Partners and T.H. Lee, and a second tranche of six other private equity managers.

“We had too many managers, some no longer strategic.” said Larry Schloss, chief investment officer and deputy comptroller for asset management in an interview.

The current plan is to invest more capital with fewer managers.

The systems comprise five city pension funds with total assets of $122 billion.

The pension plans had 108 general partners before the sale and ended up with 99 general partners, excluding new managers, Mr. Miller said. Sold in the second tranche were funds of AEA, Ethos Private Equity, HM Equity Management, NewSpring Ventures, Tailwind Capital and Vitruvian Partners.

Although pension fund officials received bids for all of the fund interests they put up for sale, it withheld a portion of them because they did not get a good enough price, Mr. Miller said.

“One of the challenges … is that we are a very large percentage of a lot of funds, which can be more difficult to sell,” Mr. Schloss said. “We are opportunistic sellers.”

The sale gave the pension funds capital to make new investments. Fund officials have been making about $2 billion in commitments per fiscal year. Fund officials plan to re-evaluate the private equity portfolio and could sell more private equity interests.