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Reed College Endowment Pins Hopes on Hedge Funds

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Located in cloudy Portland, Oregon, Reed College is a quiet liberal arts college known for its egalitarian ideals and nude walks. Apple co-founder Steve Jobs was once a student at Reed College. With just over a half billion in endowments assets, the college is highly-reliant on fee-heavy Wall Street hedge funds for investment returns. Reed College’s endowment is heavily allocated into hedge funds and private equity funds, at a much higher allocation percentage compared to most U.S. pension funds. Many U.S. endowments have followed the “Yale endowment model” of investing, betting big on alternative assets. It is also no secret, speaking in the aggregate, that hedge funds and many fund-of-funds have underperformed global equities in the past five years, especially when counting fees and expenses.

In June 30, 2016, Reed College’s investments totaled US$ 517.5 million and US$ 427 million of that was held in not-readily marketable investments, otherwise known as, hedge funds and private equity. An astonishing 54% of the investment portfolio was allocated to hedge funds in FY 2016, versus 55.9% in FY 2015. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Canadian Pension Giants Could Support Trans Mountain Pipeline Deal

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The British Columbian (B.C.) government and indigenous groups publicly oppose the Trans Mountain Pipeline project over a number of issues, which include environmental concerns (potential pipeline spills) and land protections. The threat of project derailment sent jitters to Houston-based Kinder Morgan, Inc., requiring the company to halt non-essential spending on Trans Mountain Pipeline L.P. Calgary-based Kinder Morgan Canada Limited, which owns the pipeline, is a listed company that is 70% owned by Kinder Morgan and 30% owned by stock market investors (float). Kinder Morgan Canada hired TD Securities to explore options regarding the future of the pipeline.

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Goldman Sachs Poised to Name David Solomon as New CEO

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Goldman Sachs is poised to name David M. Solomon, the firm’s president, as its new CEO, replacing Lloyd C. Blankfein. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Blackstone and Goldman Invest in Francisco Partners

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Larger alternative investment houses and banks are taking ownership stakes in specialist private equity firms. On July 13, 2018, Blackstone Group’s Strategic Capital Group and Goldman Sachs Asset Management’s Petershill program acquired a minority stake in San Francisco-based Francisco Partners. Francisco Partners is a private equity firm focused on tech-related companies, competing against Thoma Bravo, BC Partners, Vista Equity Partners, Bain Capital and other specialists.

Dipanjan (DJ) Deb is the Co-Founder and CEO of Francisco Partners. Before forming the company in 1999, he was a Principal at Texas Pacific Group (TPG).

Advisors

Francisco Partners was advised by Evercore and Kirkland & Ellis LLP. Simpson Thacher served as legal counsel to Blackstone and Fried Frank served as legal counsel to Goldman Sachs.

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