LPs

University of Michigan invests more in ARC Financial, EnCap deal

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  • Endowment adds $840k to original $4.9 mln co-investment
  • First co-investment in Modern Resources approved in 2013
  • ARC Financial, EnCap are long-time GPs of university 

The Board of Regents approved a $5 million CAD ($4.9 million) investment in the Canadian start-up in early 2013. Modern Resources acquires oil and gas assets with “resource upside” in the Western Canadian Sedimentary Basin, according to EnCap Investments’s website.

University of Michigan’s follow-on investment represents its share of a 80 million CAD equity injection that Modern Resources needed to meet higher capital costs and to pursue new investments, according to university documents. Modern Resources, EnCap Investments, ARC Financial and the University of Michigan did not respond to requests for comment.

University documents describe Modern Resources’s investment strategy as centered on capitalizing on the low price of natural gas, weak equity markets and companies with over-levered balance sheets to acquire low-risk, high-quality assets.

The University of Michigan is a long-time limited partner in funds managed by EnCap Investments and ARC Financial. In March, the $9.8 billion endowment approved a 4 million CAD co-investment in Aspenleaf Energy Limited, a portfolio company owned by ARC Energy Fund 7.

The university had a 13.1 percent allocation to private equity as of Oct. 31, according to documents. The portfolio is valued at $1.3 billion.