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Stanford puts $1bn of portfolio on market

San Francisco, October 10, 2009

Stanford University is trying to sell $1 billion of its $12.6 billion portfolio of assets including investments in venture capital, its head of investments said.

The top-tier university nestled in the heart of Silicon Valley is selling at a time when the value of its endowment has dropped nearly 30 per cent. Investment bank Cogent Partners is coordinating a sale of private equity, venture capital, timber, oil and gas and real estate assets with bids due at month's end.

John Powers, chief executive officer of Stanford Management Co, said the university will sell only if the price is right.

"We are not a distressed seller so we're quite willing to not do it if we don't get terms we are comfortable with," Powers told Reuters.

"We had very deliberately chosen to wait until the markets had recovered somewhat to explore if this made sense," he said, adding that Stanford has $800 million of borrowed money, stored in short-term holdings, that it has yet to tap into.

"If in fact we get a level of interest that we think merits a response, I would expect (the sale) to move relatively briskly," he told Reuters.

He said it could be completed by December or January.

One potential buyer in the secondary market said that, although the assets will be sold below their purchase price, the university expected a good price.

"It is not hard pressed on pricing and the university may be aggressive on what it tries to get as a price," said one person in the secondary market, who has held talks with Stanford over the sale. He spoke on condition of anonymity because the talks were private.

Powers said the goal is to raise the liquidity of the university's holding, in order to rebalance its portfolio. But the university was finding not all assets had equal appeal.

"There doesn't appear to be a lot of interest in private real estate assets," he told Reuters.

Stanford, which counts Google founders Larry Page and Sergey Brin and other technology titans among its graduates, is cutting 500 jobs and scaling back budgets this year due to an estimated 30 per cent drop in the value of its endowment.

The endowment had dropped in value 27 per cent to $12.6 billion as of Aug. 31, compared with a year ago, hurt by volatile markets.

Kate Mitchell, managing director of venture capital investors Scale Venture Partners, said that although there had been rumors of many such secondary sales, there had been little action because buyers and sellers could never agree on price.

"There has been a narrowing of the spread between the buyers and sellers," she told Reuters. "They couldn't come to terms in January. As I'm hearing it, people are actually closing a lot of deals now."

Sales were now being facilitated because the public market was up, increasing prices, and sellers were being "more realistic" about what prices they might expect to obtain, she added. – Reuters




Tags: assets | portfolio | investments | San Francisco | Stanford |

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