Endowment Fund Turns To Secondary Market To Boost Liquidity

Nov 7 2013 | 11:55am ET

The Endowment Fund plans to sell $1.8 billion in hedge and private-equity fund investments on the secondary market, to raise money to begin to pay redemptions and boost liquidity.

The fund of funds, which seeks to mimic the strategies of top-performing university endowments, has hired the Blackstone Group's placement agency, Park Hill Group, to begin marketing the stakes, Bloomberg News reports. The fund plans to hold a $650 million tender offer before the end of the year.

Then, in the first quarter, clients will be given a choice of remaining in the Endowment Fund or moving their money into a self-liquidating fund, which will redeem or sell assets over time. Those moving into that vehicle will also have the option of selling their stakes on the secondary market, Houston-based Endowment Advisers wrote in a letter last month.

"In January 2013, we committed to our investors that we would return with a solution for investors who desired more liquidity within four to six quarters," spokeswoman Christina Moon told Bloomberg. "We are pleased today to announce that less than four quarters later we have initiated a plan to do just that, which we have communicated to investors."

In addition, the firm, which has $2.9 billion in assets, will limit its new commitments to private-equity, real-estate, natural-resources and energy investments, to help improve liquidity.

Endowment has underperformed the markets since it was set up in 2003 by Morgan Creek Capital Management founder Mark Yusko and Salient Partners. Yusko left the joint-venture in January.


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