The New Zealand Superannuation Fund (NZ Super) has announced the sale of its stake in five offshore private equity real estate funds to Partners Group for an undisclosed price.
Partners Group acquired units in funds managed by Orion Capital Managers, Rising Straits Capital, Clearbell and Gaw Capital, according to official information.
The sale is part of NZ Super’s ongoing efforts to reduce its roster of external managers. Last month, it sold three offshare private equity funds to an undisclosed buyer.
Fiona Mackenzie, head of investments, said: “While private equity real estate has been a profitable part of the fund’s portfolio, these were relatively small investments and the move to sell them is consistent with our strategy to have fewer, deeper relationships with our investment managers.”
The real estate funds own assets in continental Europe, the UK, India, Greater China and Southeast Asia. NZ Super acquired the units between 2009 and 2011.
They include Orion European Real Estate Fund III, a European opportunity that raised €1bn in 2009, and Mountgrange Real Estate Opportunity Fund, a fund managed by Clearbell (formerly Mountgrange). A stake in co-investment vehicle MoREOF (Parallel I) Unit Trust was also sold.
NZ Super also sold interests in two Asia-focused funds: Red Fort India Real Estate Fund II, managed by Rising Straits Capital, and Gateway Capital Real Estate Fund III, managed by Gaw Capital.
With this latest transaction, the New Zealand sovereign wealth fund has signalled that it is moving away from real estate investment.
It has two remaining property investments: Savanna Real Estate Fund II, a private equity real estate fund with assets located in the major markets surrounding New York City, Washington DC and Boston; Sveafastigheter Fund III, which owns assets primarily in Sweden and Finland.
NZ Super also has investments in commercial real estate debt in Japan.
NZ Super’s portfolio now consists mainly of infrastructure, timber assets, and equity in a range of companies, mostly in information technology and services, globally and in New Zealand.
Having adopted an operating model to actively manage its investment to maximise returns, NZ Super has been gradually culling the number of managers. It has 35 today.
It is widely known in international fund management circles that NZ Super will seek to form more partnerships with selected external managers to give it better control of its investments.
NZ Super’s objective is to build an agile and scalable operation before its 2021-22 financial year, when Crown contributions are expected to resume.
The New Zealand government wants to reduce the country’s net debt to around 20% of GDP by 2020. The New Zealand Treasury has said it expects to achieve its target by then, enabling it to resume contributing to the sovereign wealth fund from 2021-22.
The fund, which has NZD28bn under management, is a New Zealand government savings vehicle to help pre-fund the future cost of universal superannuation.
Partners Group, which has raised capital for a specific real estate secondaries strategy, has estimated that there is a $5bn in global real estate ‘secondaries’ in the pipeline.
Last year, The California Public Employees’ Retirement System (CalPERS) sold $3bn (€2.79bn) in real estate fund interests, marking the largest secondary market transaction in the asset class.
