Re-ups are the order of the day for many university endowments as summer starts to wane. But that’s only if they choose to make any pledges at all.
One example is Purdue University, which began its private equity program in 2003. The limited partner has committed $10 million to the asset class so far in 2009, but is being very cautious about further pledges. Scott Seidle, senior director of investments at the endowment, told Buyouts that any more commitments this year would go only to existing managers.
The LP’s most recent slugs of $5 million each went to the latest vehicles of two mid-market buyout shops, Charlesbank Equity Fund VII and TA Associates XI.
“There’s really not a lot on our forward calendar at this point. We’re going very cautiously,” said Seidle. The school might consider committing to a fund being raised by an existing manager, but it is not looking to commit to any first-time funds, nor to any secondary vehicles, said Seidle. Purdue has a target allocation of 10 percent to private equity, with a range of 5 percent to 15 percent.
Other university endowments echoed this view. “The only thing we will probably do this year is a small investment or two to successor funds, maintaining relationships with existing managers,” Tom Heck, CIO of the Ball State University Foundation, told Buyouts.
Kenyon College Endowment’s Joe Nelson, vice president for finance, also indicated that the school is maintaining relationships with existing managers, making two pledges in the past year, one to a private equity fund and one to a venture capital fund. Nelson does not expect to make any private equity commitments in the next six months, “only because I do not expect any of our current managers to be raising a new fund in that time,” he said.
Lehigh University, which has doled out $14 million between two private equity funds earlier this year, may or may not make a new commitment in the coming months, depending on the opportunities that present themselves, according to Peter Gilbert, CIO of the endowment.
Elsewhere, the chief investment officers at a number of public pension funds contacted recently by Buyouts were showing similar restraint.
Asked if he knew roughly how much the pension fund might commit to private equity for the rest of year, Karl Koch, CIO of the Iowa Public Employees’ Retirement System, told Buyouts: “No; a lot is still dependent upon how the economy does and what impact that has on partnership fundraising for the remainder of the year.”
Gregory Samay, CIO of the Arlington County (Va.) Employees’ Retirement System answered the same question with, “I expect no new commitments to private equity over the next 12 months minimum.” Brendan Brosnan, CIO of the Louisiana School Employees’ Retirement System, fell into the same camp, saying he also does not anticipate making any new commitments to the asset class this year.
This sentiment is reflected the fundraising numbers reported in the July 6, 2009 issue of Buyouts. For the first half of the year, buyout and mezzanine funds launched by U.S. firms raised $36.2 billion, an amount that puts the overall fundraising figure for 2009 on a pace to come in at less than 30 percent of 2009’s total of $264.1 billion.