UMich shifts focus to healthcare, lower-mid-market funds

  • Francisco, Huron Capital among recent commitments
  • $10.6 bln endowment commits to 2 healthcare funds
  • University of Michigan PE portfolio valued at $1.3 bln

University of Michigan’s $10.6 billion endowment recently doubled up on commitments to lower-mid-market buyout funds.

In December, the university committed $25 million to Huron Fund V, a lower-mid-market buyout fund focused on companies in the Midwest and Southwest, an investment disclosure released this week shows. Huron Capital’s latest fund held a final close on $550 million and will invest $20 million to $70 million per deal.

The endowment also secured a $20 million allocation to Francisco Partners’ Agility Fund in September, a $600 million vehicle for investments in smaller technology-sector deals. Francisco Partners’ main fund, which closed on $2.86 billion in 2015, typically pursues deals valued at $50 million to $2 billion.

The endowment also allocated to a pair of funds focused on healthcare strategies. The larger of the two commitments, $50 million, went to Deerfield Private Design Fund IV. Deerfield Management’s latest fund will provide alternative financing for acquisitions in the healthcare sector.

Deerfield IV had raised $2.4 billion toward a stated target of $2.5 billion as of November, according to SEC filings.

The endowment increased the size of a commitment it made to Healthcap VII, a $220 million healthcare venture fund in Stockholm. University of Michigan committed 12 million euros ($14 million) to the fund in June 2015, which it increased to 18 million euros in November.

University of Michigan had a 12.1 percent allocation to PE as of Jan. 31. The portfolio is valued at $1.3 billion.

Its venture capital portfolio, which represents 13.1 percent of its assets, is valued at roughly $1.4 billion.

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