Two sources confirmed to peHUB today that Cogent Partners has been hired by Stanford’s endowment to sell some portion of its private equity portfolio. Beyond that, there are still lots of questions about exactly what Stanford hopes to get out of the deal.
The news was first reported by LBO Wire. A managing director for Cogent declined to comment.
One interested purchaser with around $1 billion under management told me he contacted Cogent and was told the deal was “so big I shouldn’t even bother thinking about it.” That investor, who has purchased assets from Cogent before, said Cogent was tight-lipped about the particulars of the assets and got the impression that Cogent had a list of very large investors it was already pitching the deal to.
Another source with billions under management and who is familiar with the proposed sale said the deal is different than a traditional secondary sale because Stanford wants to work out some kind of “joint venture” arrangement in which it will continue to hold a stake in its private equity assets. For example, if it has a commitment that is 50% called down, it would rather sell 25% instead of the full 50%, the source says.
LBO Wire reported that three sources say Stanford’s “total alternative investment portfolio has about $5 billion in unfunded commitments across all illiquid asset classes” and that one source says Stanford is looking to sell $400 million to $600 million of those assets.
As previously reported by peHUB, Stanford this week announced abysmal performance for its endowment. The “endowment declined in value by 27 percent over the past year to a value of approximately $12.6 billion as of Aug. 31, 2009,” according to a statement issued by the university.”
The statement goes on to say: “In light of the decline, the university has reduced the payout on individual endowment funds by 10% in the current fiscal year that began September 1, and announced plans for a further 15% reduction in fiscal year 2011. The university’s budgeted endowment payout for the 2010 fiscal year is $829.6 million, equal to 6.6% of the beginning of year endowment value.
“The university has largely completed the budget cuts necessitated by the lower endowment payout. These reductions include a university-wide salary freeze, over 400 staff layoffs, elimination of vacant positions, postponement of $1.1 billion in capital projects, program consolidations and other reductions.”