US-Based Endowment Plans Investing in Private Equity: Northeast vs. West – March 2015

by Joseph Borda

  • 13 Mar 2015
  • PE

Preqin’s Investor Intelligence online service currently tracks 483 US-based endowment plans that are actively investing in private equity funds, representing approximately 9% of all investors active in the asset class. Two-hundred-and-sixty endowment plans are located in either the Northeast or West US, with 69% based in the Northeast. These Northeast US-based endowment plans have aggregate assets under management (AUM) of approximately $251.3bn. In regards to West US-based endowment plans, the aggregate AUM is considerably lower ($92.2bn). Although the Northeast and West US regions comprise 23 states, over 50% of the endowment plans are spread out across four states: New York (57), California (44), Pennsylvania (34) and Massachusetts (33).

Northeast- and West-based endowments have average current allocations to private equity of $302mn and $191mn respectively. The largest US-based endowment plan investing in private equity is based in the Northeast, Harvard Management Company, with $10.6bn allocated to the asset class. Stanford Management Company has the largest current allocation in the West US, with approximately $6.5bn allocated to private equity. 

With Northeast and West US-based endowment plans currently below their target allocations by an average of 1.4% and 1.6% respectively, it would appear that endowment plans in these regions will continue to be key contributors to the private equity asset class. 

Some examples of Northeast and West-based endowment plans that are investing in private equity over the next 12 months include Phillips Academy Endowment Andover, Princeton University Investment Company (Princo) and UC Santa Barbara Foundation. Massachusetts-based Phillips Academy Endowment Andover and New Jersey-based Princo are looking to commit to new private equity funds on an opportunistic basis over the coming year. Both endowments expect to mostly re-up with existing managers from within its investment portfolio, but are also open to forming new GP relationships. Princo expects to allocate between $20mn and $200mn per private equity vehicle. California-based UC Santa Barbara Foundation plans to commit $10mn across four separate funds over the next 12 months. 

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