Michigan Endowment Dips Toe into Crypto Pool

The $11.9 billion University of Michigan endowment fund has invested $3 million in cryptonetwork fund CNK Fund I, which was raised by venture capital firm Andreessen Horowitz.

The investment was revealed in a recent board of regents meeting agenda reporting on 2018 commitments to alternative investments.

CNK Fund I invests in cryptonetwork technology companies across the spectrum of seed-, venture-, and growth-stage opportunities.

“Crypto has become an important area of innovation and entrepreneurship that warrants focused attention,” wrote Kevin Hegarty, chief financial officer of the University of Michigan, in an agenda letter to the university’s board of regents. “Crypto is currently regarded as a distinct type of technology by entrepreneurs, funding sources, and developers. By creating a separate fund, [Andreessen Horowitz] hopes to be better positioned within this community than would be the case by continuing to invest through its generalist IT funds.”

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In a recent report suggesting institutional investors consider investing in cryptoassets, consulting firm Cambridge Associates said it expects institutional investors exposure to the cryptoassets will rise in the coming years.

The investment into the crypto fund was among $233 million in commitments to alternative investments made by the university in 2018, according to the agenda.

The endowment invested $50 million in TCV X, a venture capital fund that invests in expansion and late-stage technology companies. TCV, as an active, long-term investor, stays involved with its portfolio companies through their initial public offerings and beyond, according to Hegarty. Within technology, TCV focuses on businesses in the internet, software, infrastructure, and services sectors.

The university also committed a total of $50 million to Kuramo Africa Opportunity Fund Ill, and Kuramo Africa Opportunity Co-Investment Vehicle III, which are companion funds sponsored by Kuramo Capital Management and are focused on investment opportunities in sub-Saharan Africa.

The endowment also committed $20 million to Mosaic Ventures II from Mosaic Ventures, a London-based venture capital fund. The fund will invest in early-stage information technology companies in Europe, primarily the UK, Germany, and the Nordic region.

“Mosaic is positioned to take advantage of a market opportunity created by the growing number of European-based technology companies in need of start up financing in an environment where less venture capital is available,” said Hegarty.

The endowment also invested a total of $110 million in real estate funds Carmel Partners Fund VII, KHP Fund V, and Zell Equity International VI Andean Tower Partners Co-Investment.

Yale Dives into Cryptocurrency

Tags: Andreessen Horowitz, Cryptocurrency, Endowments, University of Michigan

Despite all major public markets indices being at a lower point last December than where they were at the beginning of the year, the Ontario Municipal Employees’ Retirement System (OMERS) pulled through with a positive 2.3% return, or $2.2 billion, for 2018.

The core of the diversity in its portfolio is the strength in the system’s private markets strategies, which are separated between OMERS Infrastructure and OMERS Private Equity. Together, the two generated a 10.3% return in 2018, with about $10 billion deployed in new investments in the strategies during that time.

“A return of 10.7% from private investments and positive returns on our credit portfolio buffered the impact of public markets in a year when all major indices were lower compared to where they were at the beginning of the year,” said Michael Latimer, chief executive officer of OMERS.

The system improved its funded status to 96%, which “primarily reflects our five-year net investment return of 8.1%,”said Jonathan Simmons, the system’s chief financial officer.

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OMERS’s infrastructure program is a prominent standard-bearer of the direct investment model that many Canadian institutional investors employ, and follows a robust, active strategy that holds many different high-profile assets in its portfolio, including the London City Airport, Chicago Skyway, Port of Melbourne, and Thames Water. The team closed on at least five different acquisitions in 2018,a feat considering the illiquid, expensive nature of the asset class. OMERS Infrastructure also recently announced its first foray into the Indian infrastructure market, which is poised to generate lots of attention from other investors since the need for physical assets to support the growing population is significant.

OMERS Private Equity equally closed on five acquisitions during 2018, according to its website. The $11.5 billion (net) portfolio is supported by over 50 investment professionals who specialize in direct investment strategies.

The system’s net returns and asset mix in 2018 are summarized below:

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Tags: Ontario Municipal Retirement System, Pension, Private Equity, Returns