The Willamette University Endowment has committed a total of $89 million across 13 different private equity funds. There is exposure to all broad styles, types and sizes of private equity funds from primary and secondary funds to direct private equity and fund-of-funds.
The breakdown by style of all capital committed by Willamette: seven buyout funds (54%), two mezzanine funds (16%), two venture funds (13%), a distressed debt fund (3%) and a Private REIT (14%). While there is a clear concentration on buyout funds, this private equity portfolio is diversified across all sizes and all four types of buyout funds.
The private equity funds are heavily focused on alternative energy, clean technology and healthcare. The Willamette University Endowment has direct primary exposure to these sectors through the Cadent Energy Fund, TCW European Clean Energy Fund and Pinnacle Ventures Equity Fund. These three funds are approximately 30% of Willamette’s committed capital, and do not include indirect and secondary exposure to these industries through the other seven fund-of-funds. Overall, the portfolio has a heavy concentration in the alternative and clean energy sectors. This focus is also a recurring theme in the fund-of-funds. In addition, there is minimal exposure to consumer staples, financial, industrials and materials.
Vintage Year Analysis
With the exception of Northgate Private Equity Partners, each fund has some vintage year exposure between 2006 and 2008. Funds with vintage year exposure between 2006 and 2008 were making capital commitments and investments at the peak of the macroeconomic cycle. Historically, these funds that were paying higher multiples will have a much higher cost basis than funds with vintage years before or after. Funds with a high cost basis will have an uphill battle for the remaining life of the fund in order to generate high multiples and IRR’s.
There are still five funds that have not reached their final close date. Based on the fund managers’ capital forecasts, all expect to have their final close by 2011, with the exception of Montauk TriGuard IV which began investing in 2008.
There is overlap between the 13 private equity funds. Coller Int’l Partners V Fund has directly invested $100...