Private equity: Arizona’s ASRS argues the case for secondaries

Arizona State Retirement System, managing approximately $50 billion in assets, is expanding its private equity exposure through a dedicated secondaries strategy. The fund has established a separately managed account with a $250 million commitment focused on purchasing private equity stakes from limited partners seeking liquidity. This move represents a targeted expansion of ASRS's existing $8 billion private equity portfolio, which historically concentrated on upper-mid and lower-mid market investments where the fund identifies operational improvement potential and market inefficiencies.

The secondaries initiative complements ASRS's parallel co-investment program, which is on track to deploy 30% of the overall private equity allocation through direct deal participation with general partners and structured separately managed accounts. According to Samer Ghaddar, deputy chief investment officer, the secondaries market offers compelling economics: investors can acquire assets at discounts from sellers eager to offload entire asset baskets, while capital is already deployed and generating returns. This positioning allows ASRS to benefit from dislocation opportunities, particularly in the continuation vehicle market where GPs increasingly treat these structures as exit mechanisms.

Ghaddar addressed investor concerns regarding private equity NAV accuracy during ASRS's December 2025 investment committee meeting. Research findings he cited indicated that 76% of private equity exits exceed their reported NAV, providing empirical support for the fund's confidence that asset valuations appropriately reflect underlying value. This data point undermines common institutional investor skepticism about inflated private equity valuations and strengthens the case for secondaries entry at the fund level.

The secondaries strategy reflects ASRS's broader portfolio optimization effort, which includes reducing its manager roster from 93 to 45–50 strategic partners. By consolidating relationships and increasing allocation density with selected managers, while simultaneously accessing secondary opportunities, ASRS aims to enhance capital efficiency and decision-making velocity. The combination of co-investments, direct secondaries purchases, and rationalized manager relationships positions the fund to capture value across multiple entry points in the private equity ecosystem while maintaining strategic alignment with its core sector and market-size focus.