Stanford auction cancelled on value disappointment

Bids that came in for the private equity stakes were not ‘on par with the value of the assets’, the endowment’s CEO John Powers told PEO in an interview.

Stanford University has called off a secondaries auction of up to $1 billion of its private equity and real estate interests as the endowment didn’t get bids that were “on par with the value of the assets”, John Powers, president and chief executive officer of the Stanford Management Company, said today.

Stanford put assets on the secondaries market in the autumn as a way to “rebalance the portfolio” and “improve liquidity”, Powers told PERE's sister website PEO at the time.

The Stanford auction was uniquely structured as an offering of partial interests in partnership stakes so as to keep relationships with GPs intact.

Stanford was “absolutely not” looking to get out of private equity and private equity real estate investing entirely, Powers said in an earlier interview. The assets Stanford put up for sale included funded and unfunded interests, and the funds included buyouts, venture capital and real estate.

Stanford had the luxury of being a patient seller. Powers said today the 15 to 20 bids the endowment ultimately received for the private equity and real estate interests never reached the price Stanford was looking for.

“We always said this was something we didn’t have to do, but we would do it if we got strong enough bids,” Powers said. “We got great bids relative to where the market was but not in our mind on par with the value of the assets.”

Stanford has about $15 billion in total assets, down from $21 billion it reported in 2008. As of 30 June, 2008, the endowment had a 12 percent long-term allocation range for private equity.

Cogent Partners, an advisory firm that was brokering the secondaries auction, declined to comment.