University of Michigan sets $144 million for 4 funds

Updated with correction

University of Michigan's investment office committed a total of $144 million to four alternative investment strategies from the university's $11 billion long-term endowment pool.

The largest commitment was $50 million to Apollo Financial Credit Investment III, an absolute-return fund, said Kevin P. Hegarty, executive vice president and chief financial officer of the Ann Arbor-based university, in a report prepared for regents in advance of their meeting Thursday.​

The fund, managed by Apollo Capital Management, will invest in senior life settlements sold primarily by banks and tradable, high-yielding insurance-linked bonds collateralized by insurance company reserve funds.

UM made commitments to two venture capital funds: $40 million was allocated to Foresite Capital Fund IV and $15 million to BRV VI, Mr. Hegarty's report showed.

The Foresite fund will seek investment opportunities in late-stage health-care companies with strong growth potential. The management team's strategy is to invest in "largely derisked assets which are close to regulatory approval and commercial launch," Mr. Hegarty wrote

BRV VI, managed by BlueRun Ventures, on the other hand, targets investment in early-stage technology companies in the mobile communications sector.

Mr. Hegarty said the BRV fund's investment themes will include finding companies offering real-time data computing that exploits the convergence of mobile and social data; mobile applications for health-care and educational services; and consumer/retail software services that enable payment on mobile devices.

UM investment officers also committed $39 million to CVC Capital Partners Fund VII, a private equity fund focused on large-company buyouts primarily in Western Europe. Portfolio managers will concentrate investments in companies in manufacturing, consumer/retail, business services, chemicals, financial services and technology/telecommunications sectors, Mr. Hegarty's report said.

UM's investment office has authority to invest in new funds and strategies offered by existing managers without approval by the board of regents.