Mutual Fund Giant Wellington Looks to Break Into Business of Buying, Selling PE Stakes

Mint

5 hours ago

(Bloomberg) -- Wellington Management Co., which is best-known for traditional stockpicking funds, is plotting a move into the fast-growing business of buying and selling private equity stakes.
The money manager is in talks with potential hires to start a so-called secondaries arm to acquire illiquid positions from other investors, according to people familiar with the matter.
The firm is working with an executive recruiter and told candidates about its plans, the people said, asking not to be identified because the information isn't public.
A Wellington spokeswoman declined to comment.
The firm, which oversees more than $1 trillion of assets, has its roots in managing mutual funds.
Like other money managers, it's increasingly drawn to the $13 trillion private markets industry as the pool of publicly traded US firms shrinks. Traditional asset managers are also grappling with outflows and squeezed margins as clients leave mutual funds for cheaper index products.
That shift — and the allure of higher fees — is reshaping managers that are best known for picking stocks and bonds.
Wellington, which has a large institutional client base, has been investing in private equity for at least a decade and has also backed unicorns such as WeWork and Airbnb. In recent years, it has made a more aggressive push into private markets.
The Boston-based firm hired a team of four fund managers from Pacific Investment Management Co. this year to start a private real estate credit platform as it aims to grow in private credit.
By entering the secondaries market, Wellington would provide relief to investors that need cash because of a prolonged lull in deal exits.
President Donald Trump's tariff war has further hobbled dealmaking, forcing yield-starved pensions to offload their stakes to secondhand buyers at discounts for cash. Meanwhile, elite universities are selling private-fund stakes to shore up cash in the face of threats to their tax-exempt status.
New buyers are now stepping into the arena, betting that the secondaries industry could top past records. Exchange-traded fund giant BlackRock Inc., which struck deals to buy three private-markets firms in the space of a year, said in a recent report that it predicts that the secondaries market growth will accelerate.
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