Strong recent performance in Asia and potential Chinese asset recovery led both funds to reconsider selling
Two of Canada's largest pension funds pulled back from efforts to offload private equity assets worth a combined US$3bn, Bloomberg reported.
Buyers had demanded steeper discounts than either fund was willing to accept, according to people familiar with the matter.
According to the outlet, CPP Investments halted a process to sell approximately US$1.5bn in Asia-focused fund stakes, which included assets managed by Hillhouse Investment, Bain Capital and PAG.
The fund reconsidered after those assets showed strong recent performance: shares in Tokyo-based flash memory maker Kioxia Holdings Corp., a Bain Capital investment, have risen more than 300 percent this year on the back of the artificial intelligence boom.
A potential recovery in Chinese assets also factored into the decision to pause, the people said.
The Caisse de dépôt et placement du Québec similarly suspended a February undertaking to sell an estimated US$1.5bn of Chinese private equity assets.
The Caisse's portfolio, which included funds managed by HSG (formerly Sequoia Capital China), Warburg Pincus and Boyu Capital Investment Management, was priced at a 50 percent discount by some prospective buyers, one of the people told Bloomberg.
Abu Dhabi Investment Authority was the lead bidder, though the price it was considering was not disclosed.
The retreats reflect sustained investor caution around Chinese private equity.
Xuanyi Liu, private funds partner at Morrison Foerster, told the outlet in February that some China-focused funds could see discounts of 30 percent depending on the portfolio, making the 50 percent figure offered on the Caisse portfolio notably steep.
The Canadian Press reported the decisions come alongside a completed transaction.
CPP Investments announced Wednesday it sold a portfolio of 33 limited partnership fund interests accumulated over roughly two decades to Blackstone Strategic Partners and Ardian, generating net proceeds of approximately $4bn.
Benefits and Pension Monitor quoted Tom Kapsimalis, managing director and head of secondaries at CPP Investments, calling the deal "an attractive opportunity to optimize our exposure" that supports capital allocation across the portfolio.
All parties named in the Bloomberg's reporting — CPP Investments, the Caisse, Abu Dhabi Investment Authority, Greenhill, HSG, Bain, PAG and Warburg Pincus — declined to comment.
Boyu and Hillhouse did not respond to requests for comment.
