Harvard Management Company, which looks after the university’s considerable endowment, has retained Dallas-based advisory firm Cogent Partners to pitch the sale of a secondary portfolio, according to PEHub.com, the sister Web site of Buyouts. The asking price for the available portfolio, which includes a variety of venture capital and buyout funds, is said to be in excess of $1 billion.
It may be difficult to get any deal done, however, considering the icy conditions in the secondary market. Potential interested parties expressed a number of concerns to PEHub.com. First, they believe financing for a deal of this size would be a huge obstacle under current market conditions, basically requiring either syndication with other secondary firms or perhaps a partnership with sovereign wealth funds.
Also, Harvard Management isn’t looked at as a motivated seller because it’s not facing a liquidity crunch so a discount seems unlikely. The endowment’s value stood at $36.9 billion as of June 30, 2008, reflecting an annual investment return of 8.6 percent, net of all expenses and fees, according to the Harvard University Gazette.
And finally, sources speaking with PEHub.com also had some trepidation about buying from the university. The braintrust of Peter Dolan, the director of private equity for the endowment, and Jane Mendillo, Harvard Management’s president and chief executive officer, is understandably considered smart money. Mendillo has more hands-on experience with private equity than most endowment chiefs, having worked with consulting firm Bain & Co., the progenitor of Bain Capital, earlier in her career.
Harvard Management and Cogent Partners both declined comment for this story.