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Harvard said to have discussed sale of private equity stakes

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.

About 20% 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% return in the past fiscal year, while the overall fund lost 2%.

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.