University of Michigan, Ann Arbor, committed a total of $101.8 million to five alternative investment funds and one co-investment opportunity, and also reported its fiscal year returns.
The $9.7 billion UM endowment made the following commitments to private equity funds: $25 million to SG Growth Partners III, managed by Stripes Group, and €22 million ($27.8 million) to Altor Fund IV, said Douglas L. Strong, interim executive vice president and chief financial officer, in materials presented to the board of regents for its Thursday meeting.
Additionally, $25 million was committed to retail real estate specialist fund Sterling Value Add Partners II, managed by Sterling Organization.
IDG China Venture Capital Fund IV, managed by IDG Capital Partners, was awarded a $10 million commitment, Mr. Strong's report showed.
In co-investments, UM's endowment staff committed $4 million to a co-investment in Golf Mill Shopping Center in Niles, Ill., with Sterling Value Add Partners I, to which the university previously committed assets.
At every regents meeting, the university's CFO informs the board about commitments the investment staff has made to new funds using the same strategy that are offered by existing managers. Regents approval is not needed for these follow-on commitments.
Finally, regents approved the recommendation from investment staff to commit $10 million to H. Barton Co-Invest Fund II, managed by Harris Barton Asset Management. The co-investment venture capital fund will make direct investments in early stage technology companies, said Mr. Strong in the report.
The university previously invested in a different strategy managed by the company, the venture capital fund of funds H. Barton Venture Select.
Separately, the university said its endowment returned 18.8% in the year ended June 30.
The school said in the 15 years since its board of regents created an investment office, the endowment posted a 10.2% annualized return.
“This is an indication that markets in general, have fully recovered from the impact of the financial crisis and the economy is finally emerging from the subsequent Great Recession,” said L. Erik Lundberg, the endowment’s chief investment officer, in a news story on the university's public affairs website.
But he also noted, “while strong investment returns are welcome, such positive performance appropriately needs to be tempered by the recognition that high current returns usually beget lower future returns as markets often get ahead of underlying fundamentals.”
