Texas Attorney General Greg Abbott last week ruled that the University of Texas Investment Management Co. (UTIMCO) must release top-line performance data on funds within its private equity portfolio – whether or not those partnerships signed confidentiality waivers. In doing so, he disagreed with arguments put forth by Atlas Venture and Austin Ventures that such disclosure violated trade secret law and would leave affected funds at a competitive disadvantage.
The opinion was issued in response to a March request from UTIMCO to clarify an earlier ruling from former Attorney General John Conryn. That original decision had been careful to avoid being used as a precedent, going so far as to explicitly say that it was valid only for fund performance data through June 30, 2002. UTIMCO not only needed the new ruling to respond to new information requests under the Texas Open Records Act, but also to settle the issue once and for all by issuing what is known in legal jargon as a previous determination.
What was unclear at press time, however, was whether the new seven-page opinion issued by Abbott actually qualifies as previous determination. Greg Lee, a spokesman for UTIMCO, doesn’t think so. “We were disappointed in the ruling because we were hoping that it would be in the form of a previous determination we could rely on in the future,” he says. “But it didn’t happen that way.”
A source in the Attorney General’s office initially disagreed with Lee’s assessment, and pointed to a paragraph that allowed for future releases of partnership names, vintage years, names of fund principals, amount of UTIMCO commitment, dollars invested and dollars returned. Upon further investigation, however, he agreed that a later section excludes future releases of internal rate of return (IRRs) and partnership portfolio valuations without an additional ruling.
The irony here is that the Attorney General’s office shared UTIMCO’s desire to avoid the need for future ruling requests. As of press time last Thursday night, attorneys for both sides were meeting to figure out what exactly went wrong. Possible remedies include a correction to the existing opinion or an entirely new ruling. It also is possible that no changes will be made.
West Coast Disclosure
In other disclosure news, the San Jose Mercury News and clerical workers union Coalition of University Employees have filed suit against the University of California (UC) over the school’s refusal to release fund-by-fund private equity performance data. Filed in Alameda County’s Superior Court, the suit also asks for records of various closed-door sessions related to investment and advisor selection decisions.
UC has spent the past two decades building up a $143 million private equity portfolio, which accounts for 3.4% of the school’s $4.2 billion endowment and pension system. The private equity holdings took a loss of 15.4% for the year ending June 30, 2002, but has returned 34.7% over the last five years.
Among the assets in the UC portfolio are funds managed by Accel Partners, AIG Global Investment Group, Brentwood Associates, GTCR Inc., Institutional Venture Partners, Intersouth Partners, InterWest Partners, Kleiner, Perkins, Caufield & Byers, Redpoint Ventures, Sequoia Capital and Welsh, Carson, Anderson & Stowe.
Calls made to UC and the Coalition of University Employees requesting comment on this story were not returned.