University of California unveils fund commitments

University of California (UC) invested a total of $436m in seven 2018-founded VC funds run by Sequoia Capital, including $400m for the latter’s third worldwide growth fund, PE Hub has reported.
The regents also funded the university-owned Bow Capital to the tune of $150m, and contributed $5m and $20m to funds run by Mission Bay Capital and NeoTribe respectively.
However the regents appear to have discontinued involvement with Accel Partners, OrbiMed Advisors and Shasta Ventures, whose funds the university had backed in 2015.
UC’s overall private equity allocation is set to double over the next three to six years: the share of its endowment and pension funds held in private equity should hit 22.5% and 10%, from 13.3% and 5% respectively. The university currently allocates $1.8bn of its overall $5.2bn private equity outlay to early and late-stage venture capital investments, PE Hub said.
The university’s VC commitments netted returns averaging 19% and 16.6% over one and five years respectively, by comparison to 18.2% and 15.7% for the wider private equity portfolio over the same timescales.
However the investment committee expects leaner times ahead, with more dry powder being held for opportunistic acquisitions, and negative cash flows for the industry for the first time in seven years, according to minutes of a recent meeting.
John Beil, managing director of private equity at UC’s board of regents, said: “We do not anticipate that aggregate private equity returns will remain at this level given the amount of dry powder that is in the market. But we anticipate that we will continue to outperform the public markets, or at least that is our strong hope.”
Meanwhile, the University of California board of regents has downsized its asset management team across all class, as part of an efficiency drive that has also halved fee payouts to asset management staff to $13m from $26m five years ago.