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University of Michigan earmarks $177.5 million for 5 managers

University of Michigan, Ann Arbor, committed a total of $177.5 million to five alternative investment funds, including three co-investments, from its $10.5 billion long-term endowment portfolio.

In real estate, UM committed $50 million to Cabot Industrial Value Fund V, managed by Cabot Properties, which will invest mostly in existing industrial properties in major North American markets, said Kevin P. Hegarty, executive vice president and chief financial officer, in a report to regents in advance of their Thursday meeting.

The endowment also committed $50 million to Napier Park Strategic Loan Fund, managed by Napier Park Global Capital, which will provide capital to fund short-term mortgages to residential properties in need of rehabilitation. Napier Park has partnered with mortgage loan origination firms to provide mortgages to companies that buy, upgrade and sell single-family homes, Mr. Hegarty's report said.

UM's three co-investment commitments were to additional opportunities offered by existing credit and energy managers:

  • Redding Ridge Holdings, a company being launched by Apollo Global Management to issue and acquire collateralized loan obligations and other securities was allocated a $50 million commitment;
  • RFM Freddie K58 (UM), managed by Related Fund Management, will receive $17.5 million for co-investment in a newly originated portfolio of multifamily mortgages; and
  • Casillas Petroleum Resource Partners, a co-investment offered through Kayne Anderson Energy Fund VII, will receive $10 million for targeted investment in horizontal energy development in midcontinent U.S. oil fields. The fund and the co-investment are managed by energy specialist Kayne Anderson Capital Advisors.

UM investment officers may make additional commitments to funds run by existing managers of the endowment.