Harvard Said to Near Private Equity, Real Estate Fund Sale

Updated on
  • University seeking to unload more than $2 billion of funds
  • Lexington Partners and Landmark Partners among the buyers

Harvard University is close to reaching deals to sell private equity, venture capital and real estate holdings from its endowment as it rushes to unload more than $2 billion of assets to turn around the portfolio’s lagging performance.

Harvard Management Co., which oversees the $35.7 billion endowment, is in talks with Lexington Partners for stakes in venture capital and buyout funds, according to two people with knowledge of the matter. It also has a commitment to sell interests in real estate funds to Landmark Partners, said the people, who asked not to be identified because the discussions are private. Some additional buyers may be involved for parts of the deal, one of the people said.

Harvard declined to comment, as did a spokesman for Lexington. Landmark didn’t return calls and emails seeking comment.

Big Overhaul

The sales are part of an ambitious overhaul launched this year by N.P. ’Narv’ Narvekar, the former head of Columbia University’s endowment who took over as chief executive officer of Harvard Management in December. Narvekar is laying off about half the 230-person staff at the Boston-based nonprofit while shuttering internal hedge funds and selling stakes in funds and direct holdings in natural resources.

Harvard hired Cogent Partners, a unit of Greenhill & Co., to help sell about $1.6 billion of stakes in real estate funds and about $1 billion in private equity and venture capital investments. Harvard wants commitments in place by Friday, when the school’s fiscal year ends, one of the people said.

The portfolio Lexington is purchasing include funds from venture-capital giant Kleiner Perkins Caufield & Byers, as well as from Ignition Partners, Arsenal Capital Partners and JLL Partners, one of the people said. None of the firms could be immediately reached for comment.

Steep Discount

Harvard will likely have to sell a number of the fund stakes at a discount because they date back almost a decade and are expected to only deliver single-digit annual returns, some prospective buyers said.

Harvard sold more than $1 billion of private equity interests at steep discounts after the 2008 credit crisis when it sought to cut the amount of illiquid assets in the endowment. The private equity portfolio was once the top-performing part of the endowment but for much of the last decade has trailed benchmarks, according to university annual reports.

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