Wednesday, March 04, 2009

PE model threatened

Ivy League Universities and educational institutions have long been dominant investors in private equity firms. For some big ticket buyout firms like Blackstone and KKR, University endowments have been major source of funding. But now it appears that too is drying up fast.
While Yale froze salaries to employees drawing more than $75 k, Harvard froze it across the board on its Arts and Science school. Harvard with an endowment of $39.6 billion freezing wages, huh? Yes, you heard it right. The 2007 figures and allocations for the entire $43 billion portfolio are disclosed in the endowment’s 2007-2008 year-end report.
With such mainstay funding sources for PE firms fast drying up and leverage already a bad word, how long will the asset class sustain...?

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