NY Times: Beyond the Ivied Halls, Endowments Suffer

[marmar]

Beyond the Ivied Halls, Endowments Suffer
November 26, 2008, 6:49 am Link to This


Some of the nation’s universities are trying to sell chunks of their portfolios privately as their endowments swoon with the markets, The New York Times’s Claire Cain Miller and Geraldine Fabrikant write.

Among institutional investors, school endowments aggressively embraced private equity, real estate partnerships, venture capital, commodities, hedge funds and other so-called alternative investments over the last few years. Endowments with more than $1 billion in assets reported 35 percent of their holdings in these types of investments on average last year, a much greater portion than big public pension funds, for example.

Now they are balking. The value of some of these investments has fallen, and they are not easily shed because there is no public market for them, as there is for stocks. Worse, private equity and venture capital funds require investors to put up additional capital over time. Cash may now be in short supply at schools facing budget pressures and investment losses.

The University of Virginia, which has a $4.2 billion endowment, posted a letter on its Web site saying that it might explore the sale of some of its private equity holdings and would sell hundreds of millions of dollars in other assets.

Harvard, the granddaddy of endowments with $36.9 billion at midyear, is marketing its $1.5 billion stake in venture capital and buyout funds. And the $6.5 billion Duke University Endowment is weighing the sale of $200 million of its stake in private equity. Columbia University is also mulling the sale of some private equity holdings, though it is not a priority, The Times said, citing a person close to the endowment who was not authorized to speak publicly.

“Our firm is getting calls every day from institutions that want to sell private equity partnerships as well as firms that have bought those stakes from schools and now want to resell them,” Stephanie Lynch, the chief investment officer of Global Endowment Management, which oversees $1.5 billion in endowment funds, told The Times. ......(more)

The complete piece is at: http://dealbook.blogs.nytimes.com/2008/11/26/beyond-the-ivied-halls-endowments-suffer/