Harvard Exploring $1B Secondaries Market Sale

Jefferies is reportedly advising the university's endowment on a sale to Lexington Partners. 



Harvard University’s endowment is exploring plans to sell a nearly $1 billion private equity stake to Franklin Templeton’s Lexington Partners LLC, people familiar with the university’s plans told CIO. The Jefferies Group LLC is advising Harvard on the sale, which planning began for in the fall of 2024, and while the process is far along, it is not yet completed, the sources said.

Spokespeople for both Harvard and Lexington Partners declined to comment. Jefferies did not respond to requests for comment.

Harvard announced earlier this month that the university would raise $750 million in the municipal bond market, following a $450 million offering in March. The administration of President Donald Trump recently announced that it would freeze $2.2 billion dollars of federal grants to Harvard after the university declined to make several concessions demanded by the administration. Harvard this week sued the federal government to stop the grant freeze.

Last week, Secondaries Investor reported that Yale University’s endowment tapped Evercore to sell $6 billion of the university’s private equity portfolio—nearly 15% of the endowment’s assets under management—on the secondaries market. A spokesperson for Yale told CIO that pricing of the assets would determine if a sale would happen or not.

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Large universities, like Harvard and Yale, allocate large portions of their endowments to alternative investments like private equity, in accordance with the “Yale Model” of endowment investing, popularized by Dave Swensen, Yale’s late CIO. This strategy has historically resulted in higher annualized returns over longer periods of time than a traditional 60/40 portfolio.

But private equity exits are slowing, dry powder is building up, and fund vintages are getting older. Limited partners are waiting for distributions that have not come and so are tapping into the secondaries market. In 2024, secondary transaction volume rose 45% year-over-year to $162 billion, according to Jefferies Private Capital Advisory.

LP buyout secondaries were trading at 94% of net asset value as of the end of 2024, a significant increase from their average pricing of 87% in 2022. A person familiar with Harvard’s plans for a secondaries sale noted that the sale would happen at a discount, but called the timing of the process beneficial.

Harvard Management Co.’s asset allocation included approximately 39% of this portfolio—roughly $21 billion—allocated to private equity, with another 32% allocated to hedge funds. Only 14% of the portfolio is allocated to public equities, and 5% is allocated to fixed income, as of June 30, 2024.

Harvard last tapped the secondaries market in summer 2021, a year when year-over-year secondaries’ transaction volume rose 120%, according to Jefferies. HMC sold close to $1 billion in private equity funds on the secondaries market during this time, according to HMC’s fiscal year 2022 annual report for the one-year period ending June 30, 2022.

HMC CEO Narv Narvekar noted in the 2022 report that the sale on the secondaries market would allow Harvard to avoid the discounts those assets would likely have faced. 

Related Stories:

With Slower Private Equity Exits, Secondaries Transactions Tick Up

Why Endowments Are Not a Quick Fix for Universities Facing Funding Cuts

Endowments Face Liquidity Crunch Amid Market Pullback, Funding Cuts

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