The University of Texas Investment Management Company has been an active growth fund investor for the past several years.
The strategy appears to have paid off reasonably well, although a number of the funds are still too young to know for sure.
The main goal of the program is diversity. The funds are almost evenly divided among regions, with nine focused on the United States, 11 focused on Asia and seven addressing a rest-of-world or global approach.
What’s interesting is that the bets on the U.S. and the rest of the world have paid off best so far, while Asia has lagged. Many of the Asia funds are quite new, so it is unfair to draw too hard a conclusion.
Still, through August, seven of the nine U.S.-focused funds have positive IRRs, as do six of the seven rest-of-world and global funds, according to the money manager’s most recent portfolio report from August 2013. However, only three of the 11 Asian targeted funds have positive IRRs.
Overall, the endowment has positions in 27 growth funds with vintages from 2005 to 2012. UTIMCO has been on a recent buying binge, adding seven funds since the start of 2011, including Carrick Capital Partners, Emerald Hill Capital Partners III, Northstar Equity Partners III and University Ventures Fund I.
Sixteen of the funds in the portfolio have positive IRRs and 10 have negative ones, the August performance report shows. So performance is respectable. (One fund did not disclose an IRR.)
The top performers are the rest-of-world funds Actis Africa 3 and Gavea Investment Fund III. The 2007 Actis Capital fund has an IRR of 14.66% while the 2008 Gavea Investimentos fund has an IRR of 14.51%.
University Ventures Fund I, still only two years old, comes in third with an 11.83% IRR. Northstar Equity Partners II and Warburg Pincus Private Equity IX also are solid.
Everstone Capital Partners II from 2009 finds itself in a hole with a -12.56% IRR and NewMargin Growth Fund from 2007 has work to do with a -3.63% IRR. Several very young funds – Carrick Capital Partners from 2012 and Emerald Hill Capital Partners III from 2011 – also have negative IRRs.
The accompanying table includes all 27 funds and lists their commitments, called capital, distributions and IRRs.