Lehigh Opts For Big Boost To PE Target, Investment Pace

Lehigh University’s $1.1 billion endowment fund has given its private equity target allocation a significant lift, freeing another $88 million for investments.

The school has advanced to a 15 percent target allocation, or $165 million, up from 3 percent. In addition, the range for the target will now run between 5 percent and 20 percent, according to Dina Silver Pokedoff, spokesperson.

At present, the actual allocation stands at 7 percent, or $77 million, well ahead of both the prior target and its 3.8 percent level a year earlier. These latest moves are consistent with Lehigh’s growing interest in private equity over the past decade. For comparison, the actual allocation to private equity in 1997 stood at 2.2 percent. The limited partner anticipates reaching its target in at least five years through commitments totaling $50 million per year, said Pokedoff.

As of June 30, 2007, Lehigh ranked 72nd in endowment size among 785 institutions. The LP has previously backed HarbourVest International Private Equity Partners III-Direct and MBW Venture Partners LP. The fund added 17 new absolute return, private equity and commodity managers in 2007, according to Foundation & Endowment Money Management, with sub-strategies including event-driven and middle-market buyouts.

Peter Gilbert began as Lehigh’s first CIO in August of 2007 after overseeing investments and policy for the Pennsylvania State Employees’ Retirement System for 14 years. Previously, a volunteer investment subcommittee of the university’s board ran the endowment. Gilbert is considered something of a maverick for his views on relatively high allocations to alternatives.

“After Peter was hired, a comprehensive asset allocation study was performed. The increase in the private equity allocation is an outcome of that study,” said Pokedoff. Late last year the endowment hired Jennifer Sassani, formerly deputy director for alternative investments at PSERS, to oversee alternative investments.