University of Michigan endowment to boost investments in energy

By Janet Lorin on 6/12/2017

NEW YORK (Bloomberg) -- The University of Michigan’s endowment is looking for yield by boosting its holdings in two Texas-based energy funds.

The school said it plans to add to its investment in Denham Oil & Gas, a Houston-based fund that focuses on upstream exploration, according to an agenda item for the June 15 board of regents meeting. The endowment committed $30 million to Denham in March.

It’s also seeking to bolster its co-investment in Dallas-based Four Rivers Resources. The school committed $5 million in April to the fund, which acquires assets from an operator in the San Juan basin in Colorado.

The Ann Arbor-based school’s fund had 8.3% of assets invested in natural resources as of April, up from 6% as of June 2015, according to public filings. Natural resources is part of the alternative asset portion of the portfolio.

'Significant' potential

“These assets provide significant development potential for an area with limited drilling locations remaining,” Kevin Hegarty, CFO, wrote in the agenda item about Four Rivers.

Michigan also plans to add money to the Boston-based Bain Capital Life Sciences Fund, which will invest in growth-stage life-sciences companies. It committed $25 million to the fund in March.

The only new commitment is $80 million to HighVista Strategies, founded in 2004 by Andre Perold, for a customized portfolio of hedge funds. The Boston-based firm’s hedge fund portfolio offers “blue-chip names, several of which are closed to new capital.”

The endowment was valued at $10.9 billion as of April 30, up from $10 billion last June 30, when the fiscal year ends. The alternative asset portion of the portfolio is about 42% as of Dec. 31.

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