The $6.7B Vermont Pension Investment Commission is eyeing opportunities in the secondaries market, as it considers allocating to Neuberger Berman Secondary Opportunities Fund VI.
VPIC has committed $25M to HarbourVest Private Equity Continuation Solutions (PECS) fund, based on the recommendation of the consultant RVK. The fund focuses on investments within technology and software, as well as consumer and health care, with a geographic focus in North America and Europe.
The pension plan is also considering a potential commitment to Neuberger Berman Secondary Opportunities Fund VI, which the consultant noted would allow it to deploy capital faster. RVK also noted the fund offers lower fees than traditional buyout or venture funds.
“Secondary transaction volume has increased dramatically over the last 15 years. A large driver of this has been the dramatic decline in PE fund distributions,” noted the investment staff in the meeting materials.
“VPIC’s decision to maintain high levels of liquidity in the private markets has proven to be prudent. VPIC is not facing a denominator challenge and has no trouble raising capital for capital calls and other liquidity needs (namely benefit payments).”
In the materials, VPIC said it considers Neuberger Berman’s secondary strategy unique due to its split focus between general partner- and limited partner-led transactions,” as it allows the manager to source 95% of LP-led opportunities with exclusivity and better pricing. Further, the investment staff said geographic and industry diversification along with zero turnover of the NB’s secondary team also makes the commitment attractive.
RVK recommended the investment committee invite Neuberger Berman to the July meeting to present its offering before settling on a decision.
“There are a large number of institutional investors currently seeking to sell on the secondary market, which benefits pricing, but more importantly it will lead to higher quality assets being available,” noted the investment team in the meeting materials.
Within private equity, the pension plan is focused on investments within fund of funds and secondaries.
