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University of Michigan co-invests with Castanea

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private equity, pension fund, University of Michigan
Michigan Wolverines Head Coach Jim Harbaugh prior to the game against the Oregon State Beavers at Michigan Stadium on Sept. 12, 2015. Photo courtesy Rick Osentoski-USA Today Sports/ Reuters
  • $9.8 bln endowment backs $134 mln co-invest vehicle
  • Also commits to Lime Rock, IDG
  • University has 12.8 pct allocation to PE

The University of Michigan Board of Regents disclosed $60 million in new commitments to private equity and venture capital funds in its Feb. 18 meeting materials, including $10 million to a Castanea Partners co-investment fund.

The $9.8 billion endowment previously committed $25 million to Castanea’s fourth fund, a $600 million vehicle. After holding a final close in 2014, Castanea “evaluated a number of attractive investment opportunities which met its investment criteria, but required equity commitments in excess of Fund IV’s investment limit,” University of Michigan staff wrote in a memo.

The firm typically invests between $15 million and $150 million per deal, according to its website. The co-investment fund will allow the firm to pursue a greater number of control, buyout, and significant minority investments in the consumer and retail sectors.

Castanea raised approximately $134 million for the co-investment vehicle through October, according to an SEC filing. The firm did not respond to a request for comment.

University of Michigan also allocated $30 million to Lime Rock Partners’ seventh flagship fund, which had raised $301.5 million as of June 30, according to an SEC filing. The upstream oil and gas firm’s previous fund, an $825 million 2012 vintage, netted a 20.94 percent internal rate of return through June 30, according to Public Employees Retirement Association of New Mexico information cited by data provider Bison.

Lime Rock’s target could not be obtained. The firm did not respond to a request for comment.

In addition to its private equity commitments, University of Michigan also backed IDG China Capital Fund III for $20 million in August, according to February meeting materials. IDG Capital Partners will invest the fund in technology businesses in China’s e-commerce, finance, online education, enterprise software and gaming sectors. The firm reported a $1 billion target for the fund in an SEC filing.

The University of Michigan had a 12.8 percent allocation to private equity as of Dec. 31, according to an investment report. It held an additional 13.9 percent of its portfolio in venture capital assets as of the same date.

Action Item: For University of Michigan’s report on the Castanea report, visit http://bit.ly/1SSjowD

Photo courtesy of Reuters