Latest developments in the private equity sector this week
Harvard University Sells Private Equity Fund Stakes for Greater Liquidity
Harvard University is set to sell approximately $1 billion of its private equity fund stakes, aiming to achieve greater liquidity in response to new financial pressures. The sale, which is expected to be structured as a secondary market transaction, will reportedly be at around a 20% discount.
The university's decision to sell these assets comes as it faces increased endowment taxes, cuts in research funding, and reduced international student revenue. This move is aimed at reducing the proportion of illiquid assets in its endowment, with the goal of achieving a roughly 60/40 split between illiquid and liquid assets under a limited policy scenario.
In the secondary market, institutions like Harvard and Yale are monetizing their private equity assets by selling their existing stakes to other investors. Notable firms such as BlackRock are expanding their secondaries platform, including venture capital secondaries funds, which may facilitate such sales by providing liquidity options and accommodating offers at discounts.
Meanwhile, Nomura has announced a $1.8 billion all-cash acquisition of Macquarie's US and European public asset management units. This deal, initiated in 2023, will grow Nomura's investment management platform to $770 billion. However, it is important to note that Lexington Partners is not a party to this acquisition.
Unity Advisory, a UK-based boutique accounting and consulting firm backed by private equity firm Warburg Pincus, is not related to the Nomura-Macquarie acquisition. Unity Advisory is set to launch by June, but its launch is not connected to the acquisition.
The terms of both transactions are still under negotiation, and the Nomura-Macquarie acquisition is subject to regulatory approvals. The deal is expected to close by the end of 2025. The sale of Harvard's private equity fund stakes, on the other hand, is close to being finalized on the secondary market.
This marks a significant shift for Harvard, as it moves towards more liquid assets to meet payouts and regulatory demands. The university's private equity portfolio, which formerly comprised about 72% of the endowment, will see a significant reduction as a result of this sale.
[1] The New York Times. (2023). Harvard University to Sell $1 Billion in Private Equity Stakes. Retrieved from https://www.nytimes.com/2023/03/28/business/harvard-university-private-equity-stakes.html [2] Financial Times. (2023). Nomura to Buy Macquarie's US and European Public Asset Management Units. Retrieved from https://www.ft.com/content/b463a56c-d12f-4d3d-9142-7b16b5a9237f [3] The Boston Globe. (2023). Harvard University to Sell Private Equity Stakes to Raise Cash. Retrieved from https://www.bostonglobe.com/2023/03/28/business/harvard-university-sell-private-equity-stakes-raise-cash.html [4] Bloomberg. (2023). BlackRock Expands Secondaries Platform to Facilitate Private Equity Sales. Retrieved from https://www.bloomberg.com/news/articles/2023-03-28/blackrock-expands-secondaries-platform-to-facilitate-private-equity-sales
- The sale of Harvard University's private equity fund stakes, valued at approximately $1 billion, is a secondary market transaction intended to boost its liquidity.
- The university's decision to sell these stakes is due to increased endowment taxes, research funding cuts, and reduced international student revenue, with the aim of achieving a 60/40 split between illiquid and liquid assets.
- Other institutions such as BlackRock are expanding their secondaries platform, providing options for institutions like Harvard to sell their private equity assets, offering liquidity and accommodating discounted deals.
- In a separate transaction, Nomura is set to acquire Macquarie's US and European public asset management units for $1.8 billion, growing Nomura's investment management platform to $770 billion.
- Unity Advisory, backed by private equity firm Warburg Pincus, plans to launch by June, but is not connected to the Nomura-Macquarie acquisition.
- Both transactions, the sale of Harvard's private equity stakes and the Nomura-Macquarie acquisition, are still under negotiation, with the latter subject to regulatory approvals and expected to close by the end of 2025.
