British Columbia pension mulls $2-billion private equity asset sale to free up cash

financialpost.com:

British Columbia Investment Management Corp. (BCI) is mulling the sale of US$2 billion in private equity assets in the secondary market to raise capital for other investments, according to people familiar with the matter.

The pension fund is close to finalizing the sale of some of its Europe-focused investments and is in the middle of negotiations to reduce some of its U.S. positions, one of the people said, who asked not to be identified due to the confidentiality of the matter.

The primary goal is to rebalance BCI’s portfolio and free up cash from investments through funds to take advantage of potential direct co-investment opportunities, this person said.

A spokesperson for the Victoria-based fund declined to comment.

Some institutional investors hit their allocation limits to private equity after last year’s rise in interest rates caused a swift correction in bonds and stocks. That forces them to weigh disposing of some private equity holdings to create room for new ones. Public pensions saw their share of those secondary-market trades increase nine percentage points globally — or nearly US$2 billion — compared with 2021, as they adjust their portfolios, according to Campbell Lutyens & Co.

BCI, which invests the retirement savings of British Columbia’s public sector workers, returned 3.5 per cent for the year ended March 31, compared with a 0.3 per cent increase generated by its own internal benchmark, the fund said in the statement on June 27. Net assets advanced to $215 billion.

Private equity, infrastructure and renewable resources were large contributors to the gains, BCI said in the statement. The pension fund held $28.3 billion in private equity assets, up 4.7 per cent from the prior fiscal year.

The fund