University of Michigan's private equity data is once more, well, private. A new amendment to Michigan's open-records act now allows the state's public universities and colleges to withhold from public scrutiny individual partnership return data, including fund valuations, distributions and IRRs, as well as all portfolio company data. The only information public schools are required to release by request are names of partnerships, amount of money invested in those partnerships and aggregated return data on an annual basis.
The amendment was proposed as a result of University of Michigan lobbying; the school's investment office argued that its inability to protect fund information from public disclosure has hurt its ability to invest in potentially lucrative venture capital and buyout funds. Last year, prominent US venture capital firm Sequoia Capital banned the institution from investing in its latest fund, specifically mentioning the university's disclosure policies. Worse, Sequoia told the school to sell its interests in existing partnerships.
The change in the law comes after a period of wrangling late last year over disclosure issues culminating in a awsuit against the University of California by the school's Coalition of Union Employees and the San Jose Mercury News, who argued that state employees and taxpayers have a right to know how UC's venture capital investments are performing and that disclosure supports accountability. The university ended up losing the case. Incidentally, UC was also a Sequoia investor and had already been asked to leave the fund even before the court decision.
The new legislation matches up with Michigan's Public Employee Retirement Security Investment Act, which protects fund data from disclosure by the state's pension funds and retirement systems. The Michigan Department of Treasury last year used this act to turn down a request for fund IRRs and distributions from data company Private Equity Interactive.
Michigan is only the second state to pass legislation keeping fund data private, with Colorado having recently passed a law protecting the confidentiality of portfolio company data.