The Willamette University Endowment

766 Words4 Pages
The Willamette University Endowment has committed a total of $89 million across 13 different private equity funds. There is exposure to all broad styles, types and sizes of private equity funds from primary and secondary funds to direct private equity and fund-of-funds.

Style Breakdown

The breakdown by style of all capital committed by Willamette: seven buyout funds (54%), two mezzanine funds (16%), two venture funds (13%), a distressed debt fund (3%) and a Private REIT (14%). While there is a clear concentration on buyout funds, this private equity portfolio is diversified across all sizes and all four types of buyout funds.

The private equity funds are heavily focused on alternative energy, clean technology and healthcare. The Willamette University Endowment has direct primary exposure to these sectors through the Cadent Energy Fund, TCW European Clean Energy Fund and Pinnacle Ventures Equity Fund. These three funds are approximately 30% of Willamette’s committed capital, and do not include indirect and secondary exposure to these industries through the other seven fund-of-funds. Overall, the portfolio has a heavy concentration in the alternative and clean energy sectors. This focus is also a recurring theme in the fund-of-funds. In addition, there is minimal exposure to consumer staples, financial, industrials and materials.

Vintage Year Analysis

With the exception of Northgate Private Equity Partners, each fund has some vintage year exposure between 2006 and 2008. Funds with vintage year exposure between 2006 and 2008 were making capital commitments and investments at the peak of the macroeconomic cycle. Historically, these funds that were paying higher multiples will have a much higher cost basis than funds with vintage ...

... middle of paper ...

...ial for these private equity funds to move from not meeting expectations to meeting expectations and consequently exceeding expectations, but that is highly contingent on the future macroeconomic landscape and future credit markets. With a heavy concentration on mid-size buyout funds, private equity managers have a heavy dependence on the ability to utilize leverage and refinance their underlying investments. The 2009 financial crisis created portfolio drag in mid-sized buyout funds that can be seen throughout this portfolio. This is due to a number of capital intense and over-leveraged investments that are, or have been, in default in the last few years. If macroeconomic conditions and credit markets continue to develop we could see underlying positions improve. This would allow for the transition from not meeting expectations to potentially exceeding expectations.

More about The Willamette University Endowment

Open Document