- Endowment plans $30 million for Waterton Mining Parallel Fund
- School reports investments of $93 million in alternatives
The University of Michigan plans to invest $30 million in a fund that will buy North American gold and copper mines from distressed companies.
The school, with a $10 billion endowment as of June 30, plans to make the investment with Waterton Mining Parallel Fund, which is managed by Waterton Global Resources Management in Toronto, according to an agenda for the Board of Regents meeting on May 19.
Gold is the best-performing major metal this year after silver amid rising concern over negative rates in Europe and Japan and whether the Federal Reserve will be able to tighten further.
“These opportunities arise from the financial distress of mining companies who took on significant amounts of debt for M&A activity prior to the collapse in commodity prices since 2011,” Kevin Hegarty, chief financial officer at University of Michigan, wrote in the request for approval. “Now looking to strengthen their balance sheets, these financially distressed companies are selling assets to raise cash and reduce debt levels.”
The Ann Arbor, Michigan-based school said it also plans to invest $50 million with Sandton Credit Solutions IV, a fund managed by Sandton Capital Partners that specializes in distressed assets in the U.S. and Western Europe.
The endowment also said it invested $14 million and $7 million, with Battery Ventures XI and Battery Ventures XI Side Find, respectively, in February. Those venture capital funds invest in technology companies, according to the agenda. The school had previously invested with the group.
In December, Michigan gave $22 million to Chengwei Ventures Evergreen Fund, a venture capital fund based in Sanghai that will invest in Chinese companies that provide goods and services to the local economy. The school also committed $50 million in October to Sankaty Advisors, Bain Capital’s credit investment arm. The Sankaty Credit Opportunities VI fund focuses on debt securities. The endowment said it previously invested with these funds.
As of March 31, the fund had 19.3 percent of its assets allocated to absolute return, which is typically hedge funds; 14.3 percent in venture capital and 12.9 percent in private equity. The long-term portfolio is down 4.5 percent so far for the fiscal year, which ends June 30. The return doesn’t include investment performance of the alternative assets portfolio, which was 42.3 percent of the portfolio as of March 31, according to the agenda.