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Wisconsin shops $720m portfolio

The state investment board wants to reduce its exposure to the largest funds in the market and is selling stakes in funds managed by KKR, Charterhouse, Carlyle and Blackstone.

The State of Wisconsin Investment Board is selling a $720 million portfolio of stakes in private equity buyout funds as it works to reduce its exposure to mega-funds, according to three people with knowledge of the sale.

Wisconsin, which has a 6 percent allocation target to private equity and debt, is selling stakes in funds run by The Blackstone Group, The Carlyle Group, Charterhouse Capital Partners and Kohlberg Kravis Roberts in vintages ranging from 2002 to 2009, according to one person. Bloomberg first reported on the sale Wednesday.

Cogent Partners is running the sale, and has set a bid deadline of 3 July, which one person said was a “quick” deadline.

Cogent and the State of Wisconsin Investment Board declined to comment. The board manages about $83 billion in assets on behalf of the Wisconsin Retirement System, the State Investment Fund and other trust funds, according to SWIB’s web site.

One person who has seen the offering said the pension system appears to be selling most if not all of its holdings in KKR funds. However, Wisconsin is mostly selling partial stakes in its fund holdings, sources said.

Numerous public pension systems in the US have sold portions of their private equity portfolios to make them more manageable. Some, like Wisconsin, have also sought to reduce exposure to specific strategies, like mega-buyout funds. The California Public Employees’ Retirement System sold about $1 billion worth of mega-buyout funds last year to thin out its holdings of the largest funds in the market – a strategy it had pursued during the peak of the credit bubble in 2006 and 2007.

New Jersey’s state pension system also used Cogent to help sell more than $600 million in mostly mega-fund fund commitments last year; the New York City pension system is trying to sell $2 billion of its portfolio, using UBS as a broker for the process.

Other institutions have been selling fund stakes as they reduce their exposure to private equity fund commitments in general. Many pension systems in Canada have pursued that strategy, including the Ontario Municipal Employees’ Retirement System, which hired UBS to sell a $750 million portfolio that included funds from KKR, Apax Partners, Hellman & Friedman and TPG.

AXA Private Equity, which this week closed its fifth secondaries fund on $7.1 billion, made a high bid on the portfolio and is set to close on the deal, sources told Private Equity International in recent interviews. AXA PE also has been working with a handful of US pensions systems on sales and has reached exclusivity with one unnamed US institution that is selling a portfolio valued around $700 million, according to a person with knowledge of the situation.