Harvard taps its former private equity head as CIO

Harvard Management Corporation (HMC), responsible for overseeing the largest university endowment in the world, has appointed its former private equity vice president Jane Mendillo to head its turnover-roiled investment unit.

Mendillo, currently directing Wellesley College’s endowment, will assume her new position as HMC’s chief investment officer on 1 July. HMC currently manages roughly $34.9 billion (€22.1 billion) in assets, of which nearly $3 billion is allocated to private equity.

The former HMC private equity vice president will take over an investment division that has witnessed significant personnel departures in recent months.

In September of last year, then CIO Mohamed El-Erian left the endowment to rejoin bond giant Pacific Investment Management Company. Former Goldman Sachs director and Harvard Business professor Robert Kaplan was named interim chief executive in October.

Quickly following Kaplan’s arrival, two high-level HMC investment officials departed the firm. Real estate manager David Ferrero abandoned his post in December, while private equity manager Kevin Tunick left for the University of North Caroline-Chapel Hill last month.

Neither HMC nor Mendillo could be reached for comment on how her appointment will affect the endowment’s investment strategies or its depleted staff.

Although Mendillo’s tenure at HMC involved working in a number of different capacities, her experience with alternative assets from 1989 to 1991 raises several questions as to how her arrival will affect the endowment’s allocation to the alternative asset class.

As CIO at Wellesley, Mendillo created a new investment office to oversee management of endowment funds and significantly restructured the endowment portfolio, according to a statement from Harvard.

In fiscal year 2007, Wellesley’s endowment generated a 22.7 percent overall return, including a 36.8 percent return from private equity, according to Wellesley’s 2007 annual investment report.

As of last year, 18 percent of Wellesley’s total assets have been allocated to private equity, of which buyouts received the largest allocation at 8.44 percent.

Although Mendillo has increased Wellesley’s exposure to alternative assets throughout her tenure, in a 2007 Wellesley report she indicated some doubts about the health of private equity in the current credit climate.

“Private equity led the asset classes last year…reflecting both the growing maturity of our private equity exposure, and the favorable market condition that prevailed during the year for mangers of privately held investments,” Wellesley wrote. “Some of these conditions, for example, access to credit on favorable terms and an active merger and acquisition environment, may be significantly different over the coming year than they were over the past year.”