The University of Texas’s endowment shrunk by 5.3 percent to $24.1 billion in the year ended June 30 despite a 4.1 percent investment gain because the value of the land where the oil and gas fields are located declined, according to the school. The endowment was the third largest in U.S. higher education in the fiscal year, behind Harvard and Yale University, according to a survey by the National Association of College and University Business Officers and investment manager Commonfund.
Bright Spot
Private investments have been a bright spot for Utimco, delivering a gain of 13.4 percent in the year through August, according to the annual report.
While private equity firms have raised more than $20 billion for energy deals in the past two years, the money has largely remained on the sidelines, in part because oil producers have been unwilling to sell. That may quickly change, according to Deloitte LLP, which said more than one-third of listed producers worldwide are at high risk of bankruptcy, as their collective debt surged to about $150 billion while cash flows dwindled.
Utimco made $3.2 billion of new commitments to about 50 managers in its $8.3 billion private investment portfolio in the year through August, according to the annual report. Using Freedom of Information requests, Bloomberg identified more than 30 new funds that show the endowment investing in managers specializing in energy, real estate, technology and other sectors. In a number of cases, the amounts committed weren’t disclosed.
The biggest energy commitment disclosed was $60 million of capital invested in the quarter ended Aug. 31 in Warwick Partners III, a fund formed in December 2014 by Warwick Management Co. of Oklahoma City, according to a U.S. Securities and Exchange Commission filing. The company has $650 million invested in more than 4,100 oil and gas wells in 13 states, including Texas, according to its website.
Another recipient was Kerogen Energy Fund II and a second co-investment fund from the company, with offices in London and Hong Kong, that buys stakes in small to mid-size oil and gas companies outside North America. The capital invested totaled $15.6 million, according to a quarterly report dated Feb. 28, 2015. The endowment also made an investment of $2 million in the same quarter to GEC Partners III from Houston-based Global Energy Capital, which invests across the petroleum industry.
Utimco also committed to Oaktree Power Opportunities IV though it didn’t disclose the amount in a Nov. 30 quarterly report. The Los Angeles-based money manager, which last year said it raised $1 billion for the fund, targets investments in equipment, software and services to aid in energy generation, transmission and consumption, according to its website.