Harvard Said to Have Discussed Sale of Private Equity Stakes

  • Endowment spoke with advisers about selling part of portfolio
  • Proceeds could be used to reinvest with private equity firms

Harvard Management Co. has explored selling part of its private equity portfolio, people with knowledge of the matter said.

The largest university endowment held preliminary talks with advisers about the potential sale earlier this year, said the people, who asked not to be named because the discussions were private. The valuation of the stakes under consideration, which primarily consist of old buyout funds, would likely be below $1 billion in a sale, two of the people said.

Proceeds from the sale could be used to reinvest with existing private equity managers, the people said. HMC hasn’t hired an adviser to market the portfolio and doesn’t have immediate plans to do so, one of the people said.

A representative for HMC declined to comment.

Harvard, the oldest U.S. university, is seeking to revamp both returns and operations at its endowment operation as institutional investors contest with slow economic growth and near-zero interest rates globally. The endowment last month said Narv Narvekar, the chief executive officer of Columbia University’s $9.6 billion fund since 2002, will become HMC’s CEO on Dec. 5. Stephen Blyth resigned from the job for personal reasons in July after only 18 months, following an unexplained medical leave in May.

HMC achieved 5.7 percent annualized returns in the decade ended June, trailing Yale University’s 8.1 percent. Columbia also returned 8.1 percent in the 10 years through June.

Narvekar and his team at Columbia minimized losses during the financial crisis after reducing risks in the portfolio and allowing less exposure than most of their peers to illiquid assets such as private equity, he said at an event in 2014.

About 20 percent of Harvard Management Co.’s $35.7 billion is in private equity assets, according to its fiscal 2016 report. Those assets generated a 2.6 percent return in the past fiscal year, while the overall fund lost 2 percent.

Paul Finnegan, the co-founder of buyout firm Madison Dearborn Partners, serves as HMC’s chairman.

The endowment sold a portion of its private equity portfolio at a discount in 2009, under the leadership of Jane Mendillo, as HMC sought to raise cash during the financial crisis.

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