Texas universities in $250m secondary sale

The investment management company for University of Texas and Texas A&M Systems has sold its interests in 14 funds after unsuccessfully shopping 25 funds last year.

The University of Texas Investment Management Company (UTIMCO), the investment corporation overseeing investments for The University of Texas and Texas A&M Systems, has sold approximately $250 million (€160 million) of its stakes in private equity funds to at least six buyers, according to several sources familiar with the transaction.

The interests in 14 funds were sold in “an auction with a lot of participants”, one source said.

UTIMCO did not respond to requests for comment.

“I doubt selling parts of the portfolio to six or seven buyers was plan A,” said another person familiar with the matter. Last year, the person added, UTIMCO had unsuccessfully shopped 25 funds for approximately $400 million.

The sales on the secondary market were the result of “active portfolio management”, according to a separate market source. UTIMCO had already made the decision not to re-up with those general partners and sold its tail-end positions in an effort to “tidy up the portfolio”.

The sale was not motivated by being over-weighted towards private equity or because of a shift in investment strategy, the source said. The buoyant secondary market made selling the older relationships an attractive option.

UTIMCO is the first investment corporation formed by a public university system and is modeled after the investment companies of such private universities as Harvard, Princeton and Stanford.

The firm has a 15 percent target allocation to private equity and a 9.5 percent actual allocation, according to sister data service Private Equity Connect. UTIMCO had $23.7 billion under management as of 31 March, with $2.2 billion in private equity

The endowment makes commitments to private equity vehicles in North America and Europe. General partners have included: European buyout firm 3i, US energy investor Arclight Capital Partners and US venture firm Prism Venture Partners. Direct investment activity is also considered, usually as a co-investment alongside funds with which UTIMCO has a relationship.