China to buy LP interests from GM pension plan

According to the Financial Times, the State Administration of Foreign Exchange (SAFE), which is responsible for China's more than $3 trillion in foreign currency holdings, will pay $1.5-2 billion for the assets. Performance Equity, an advisory firm that manages pension investments for GM and its affiliates, is said to have told several private equity firms that it plans to exit some of its stakes via secondary transactions.

Numerous North American institutional investors are seeking to scale back their exposure to private equity in order to lower liquidity risk in their portfolios. This, combined with banks trimming their holds to comply with Volcker Rule and Basel III requirements, led Campbell Lutyens to predict that secondaries transaction volume will surpass $30 billion for the first time this year, up from $22 billion in 2011.

Asian sovereign wealth funds have expressed an interest in participating in the secondaries market but they are hindered by a lack of experience. China Investment Corp. (CIC) addressed this by setting up a $1.5 billion separate account under Lexington Partners' $7 billion seventh fund, which closed last year. The separate accounts invest alongside the main fund on a pro rata basis.

A source told the Financial Times that Lexington will also be advising SAFE on the GE deal and helping administer the portfolio.

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• Topics
• Secondaries
• Secondaries
• Greater China
• Secondaries
• Lexington Partners
• China
• LPs
• SAFE