--Verizon Investment Management manages assets for Verizon
Communication's pension plan
--Verizon Investment Management has hired Morgan Stanley to
explore secondary sale of assets
--Asset sale could exceed $1 billion
By Laura Kreutzer
Of DOW JONES PRIVATE EQUITY ANALYST
Verizon Investment Management Corp., which manages assets for
Verizon Communications Inc.'s (VZ) defined-benefit pension plan,
has become the latest large institutional investor looking to
potentially offload a large portfolio of private-equity assets on
the secondary market, said several people familiar with the
company's plans.
The company has enlisted Morgan Stanley (MS) to help it explore
a potential secondary sale of a portion of its private-equity
portfolio, these people said. Morgan Stanley has approached a small
handful of secondary buyers to solicit feedback and gauge potential
interest in the portfolio.
Secondary buyers and others familiar with the process expect the
portfolio to total at least $1 billion in commitments, if not more,
although one of these people said he doesn't expect a formal sale
process to begin until next year. A second person said the company
is still working out which assets it may sell and it is possible
that it could sell smaller pieces.
Verizon spokesman Robert Varettoni declined to comment.
As of Dec. 31, Verizon's private-equity portfolio had a fair
value of $5.9 billion, roughly 22% of the company's $25.8 billion
in defined-benefit assets, according to the company's most recent
10-K filing with the Securities and Exchange Commission. That
likely doesn't include any unfunded commitments.
The pension fund's private-equity target allocation is 14%,
according to the filing.
Although Morgan Stanley isn't known for intermediating secondary
transactions, the bank has vetted at least one similar type of deal
back in 2005 on behalf of another client, AES Corp.'s (AES) Dayton
Power & Light Co. unit. AlpInvest Partners NV and Lexington
Partners led the purchase of a $1.2 billion fund portfolio from the
Ohio-based utility.
Morgan Stanley spokesman Pen Pendleton declined to comment.
New York-based Verizon joins a handful of institutional
investors potentially looking to sell large private-equity
portfolios on the secondary market over the next 12 months.
Government of Singapore Investment Corp. has begun discussions with
intermediaries about the potential sale of some $1 billion in
private-equity assets, according to a report by Private Equity
News, which is published by Dow Jones.
Meanwhile, Harvard University's endowment is pitching a
portfolio of some $500 million in energy and oil and gas funds and
plans to bring another $1 billion portfolio of private-equity funds
to the market by early 2012, according to secondary buyers.
News of the Harvard sale was reported earlier by Bloomberg
News.
(Dow Jones Private Equity Analyst covers fund-raising and other
news of interest to the private-equity community.)
-By Laura Kreutzer, Dow Jones Private Equity Analyst;
978-621-5708; laura.kreutzer@dowjones.com