UMich shifts focus to healthcare, lower-mid-market funds

University of Michigan’s $10.6 billion endowment recently doubled up on commitments to lower-mid-market buyout funds.

In December, the university committed $25 million to Huron Fund V, a lower-mid-market buyout fund focused on companies in the Midwest and Southwest, an investment disclosure released this week shows. Huron Capital’s latest fund held a final close on $550 million and will invest $20 million to $70 million per deal.

The endowment also secured a $20 million allocation to Francisco Partners’ Agility Fund in September, a $600 million vehicle for investments in smaller technology-sector deals. Francisco Partners’ main fund, which closed on $2.86 billion in 2015, typically pursues deals valued at $50 million to $2 billion.

The endowment also allocated to a pair of funds focused on healthcare strategies. The larger of the two commitments, $50 million, went to Deerfield Private Design Fund IV. Deerfield Management’s latest fund will provide alternative financing for acquisitions in the healthcare sector.

Deerfield IV had raised $2.4 billion toward a stated target of $2.5 billion as of November, according to SEC filings.

The endowment increased the size of a commitment it made to Healthcap VII, a $220 million healthcare venture fund in Stockholm. University of Michigan committed 12 million euros ($14 million) to the fund in June 2015, which it increased to 18 million euros in November.

University of Michigan had a 12.1 percent allocation to PE as of Jan. 31. The portfolio is valued at $1.3 billion.

Its venture capital portfolio, which represents 13.1 percent of its assets, is valued at roughly $1.4 billion.

Action Item: More about University of Michigan’s endowment: www.regents.umich.edu

Jim Harbaugh on Dec. 30, 2014, speaks to the media as he is introduced as the new head football coach of the Michigan Wolverines at Jonge Center. Photo courtesy Rick Osentoski-USA Today Sports