December 15, 2009
Stanford Management Company will not sell assets on secondary market
Stanford Management Company (SMC), which manages the investment assets of Stanford University, has determined that it will not sell a portion of its private equity illiquid investments.
"We have been pleased to find that secondary market interest in very high quality private equity assets is far stronger than it has been in the very recent past. Nevertheless, we have determined that a secondary sale is not required to meet our liquidity and portfolio balance objectives," said John Powers, CEO of SMC. "I continue to have full confidence in our ability to meet our obligations to the university and to our investment partners."
SMC had explored the possible sale of less than 7 percent of its total investment portfolio, or up to $1 billion of $6 billion in illiquid investments after the portfolio was buffeted by declines in late 2008 and early 2009. SMC reviewed initial bids this October. The university had not intended to sell majority interest in any single investment partnership. The assets include private equity investment partnerships in buyout, growth and venture funds as well as in natural resources, real estate and distressed securities.
"During this process we had the opportunity to work with a number of leading investors in the secondary market," Powers continued. "We would like to express our appreciation to the various participants for their interest in and enthusiasm for the Stanford portfolio. We would also like to thank our advisor, Cogent Partners, for their integral part in creating a strong set of options for the management company."
The total value of Stanford's merged pool, including the endowment and other investments, was $14.5 billion on June 30, 2009. Stanford successfully raised $1 billion in a taxable bond issuance in April 2009. A portion of this was used to retire other university debt, while $800 million was retained as a liquidity buffer for the university. Those funds remain in a cash reserve and could be drawn to meet unanticipated needs of the university.