ADIA plans private equity fund stake sale

The Abu Dhabi Investment Authority is preparing to sell around $2 billion of its stakes in private-equity funds, amid an increasing push toward direct investments by the sovereign wealth fund.

ADIA is working with advisers at PJT Park Hill on the proposed transaction, according to people who asked not to be identified because the information is private. It plans to start marketing the deal to potential buyers within weeks.

Large investors like ADIA often end up with a multitude of investments run by different private-equity managers, making them cumbersome to administer. The Gulf fund is following other major investors by taking direct stakes in firms - eschewing the fees and limitations of managed funds - to generate returns in a low-interest-rate environment.

While ADIA doesn’t divulge its assets under management, it’s estimated to have about $696 billion. That makes it the thirdlargest in the world, according to data from the Sovereign Wealth Fund Institute.

The fund last year said it planned to hire, mostly for investment and researchfocused roles in its fixed income and treasury department, to boost active management. ADIA raised its actively managed investments to 55 per cent of its portfolio in 2018, up from 50 per cent the previous year.

It has become easier to sell privateequity portfolios in the secondary market, with firms such as London-based Coller Capital Ltd. raising money to trade these types of investments. An early exit from a fund gives investors a chance to cash in before the original lock-up expiry date, while buyers see upside by taking stakes in companies they expect will keep growing.

Last year, ADIA was part of a consortium that bought Nestle SA’s $10 billion skincare business. It partnered with private equity firms Advent International and Cinven Ltd. to make a joint bid for Thyssenkrupp AG’s 15 billion euro elevator unit.

ADIA) is preparing to sell around $2 billion of its stakes in private-equity funds, amid an increasing push toward direct investments by the sovereign wealth fund.

Large investors like ADIA often end up with a multitude of investments run by different private-equity managers, making them cumbersome to administer. The Gulf fund is following other major investors by taking direct stakes in firms eschewing the fees and limitations of managed funds to generate returns in a low-interest-rate environment.

Secondaries Investor reported in September 2019 that ADIA was considering selling an unspecified amount of private equity fund stakes. According to the Sovereign Wealth Fund Institute, while ADIA doesn’t divulge its assets under management, it’s estimated to have about $696 billion, making it the third-largest sovereign wealth fund in the world.

Last year, ADIA was part of a consortium that acquired Nestle's $10 billion skincare business. Additionally, the Abu Dhabi state investor also partnered with private equity firms Advent International and Cinven to make a joint bid for Thyssenkrupp’s EUR 15 billion ($17 billion) elevator unit.

ADIA also teamed up with Cinven in its purchase of British scientific measurement and testing company LGC Group. In July 2019, the sovereign wealth fund agreed to buy a stake in Domestic & General Group, the UK appliance warranty provider owned by CVC Capital Partners.

ADIA is working with advisers at PJT Park Hill on the proposed transaction, according to the people, who asked not to be identified because the information is private. It plans to start marketing the deal to potential buyers within weeks, one of the people said.

Large investors like ADIA often end up with a multitude of investments run by different private-equity managers, making them cumbersome to administer. The Gulf fund is following other major investors by taking direct stakes in firms -- eschewing the fees and limitations of managed funds -- to generate returns in a low-interest-rate environment.