Bloomberg News

Abu Dhabi Said to Explore $2 Billion Sale of Fund Stakes

July 09, 2014

Abu Dhabi Investment Authority, one of the world’s largest sovereign-wealth funds, is said to be considering selling as much as $2 billion in private-equity fund stakes.

ADIA, which invests on behalf of the government of Abu Dhabi, hired Cogent Partners to advise on the sale, two people with knowledge of the deal said. The portfolio consists mostly of positions in buyout funds, said the people, who asked not to be identified because the information is private.

Institutional investors including California Public Employees’ Retirement System, Teachers’ Retirement System of the State of Illinois and New York City’s police, fire and civil-employee pension plans have turned to the secondary market in recent years to rebalance holdings and reduce relationships with external managers. Pricing is attractive to sellers because of strong public markets and distributions to clients, according to Cogent. The average high bid for buyout-fund stakes reached 92 percent of net asset value in the second half of last year, making it the first time pricing exceeded 90 percent since 2007, the investment-banking firm said in January.

Bill Murphy, a managing director at Cogent, declined to comment. A spokesman for ADIA declined to comment.

Diversifying Holdings

ADIA, based in the United Arab Emirates capital, has expanded its private-equity and infrastructure teams as it diversifies from developed-world stocks. The authority can invest as much as 8 percent of its portfolio in private equity, according to ADIA’s 2013 annual review. ADIA added the asset class in 1989 and has backed private-equity funds that focus on North America, Europe and emerging markets.

The authority produced annualized returns of 7.2 percent over two decades through 2013, down from 7.6 percent a year earlier, the report shows. The return over 30 years averaged 8.3 percent.

The authority, which allocates 75 percent of its funds to external managers, doesn’t disclose the value of its assets. The Sovereign Wealth Fund Institute estimates its size at $773 billion, according to its website.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editors responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net Josh Friedman, Mary Romano


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