UTIMCO withholds some of its latest data

University investment arm seeks new opinion from state regarding disclosure

By Ralph K.M. Haurwitz
AMERICAN-STATESMAN STAFF
Wednesday, March 12, 2003

The investment arm for Texas' two largest university systems is withholding the latest quarterly results for about half of its private holdings while it seeks an opinion from the state attorney general authorizing disclosure now and in the future.

The University of Texas Investment Management Co., also known as UTIMCO, is seeking an opinion from Attorney General Greg Abbott as to whether it can release the performance data without consent of the individual private investment partnerships, Dow Jones Newswires reported.

In the interim, UTIMCO has declined to release its fiscal first-quarter return data for about 60 of the 120 venture-capital and private-equity partnerships in which it has invested because the fund managers objected. UTIMCO's first quarter ended Nov. 30.

The withholding of information for now does not represent a turnabout in UTIMCO's policy favoring disclosure, Bob Boldt, president and chief investment officer of the investment management company, told the American-Statesman Tuesday night.

Rather, Boldt said, his company is seeking a more sweeping opinion than it obtained last quarter from the previous attorney general, John Cornyn, now a U.S. senator. That opinion, which authorized disclosure, applied only to the matters in question at the time, as is customary in attorney general opinions.

UTIMCO manages more than $13 billion in endowments and other holdings for the UT and Texas A&M University systems. The company answers to the UT regents, who favor release of all performance data.

UT System Chancellor Mark Yudof said it was his understanding that attorney general opinions would be sought in cases where the partnerships assert a legal right to secrecy for performance information. In some cases, Boldt said, confidentiality agreements between UTIMCO and the partnerships bar release of the data.

Firms that objected to the disclosure included Austin Ventures, The Carlyle Group, Crescendo Ventures, KKR Associates and Warburg Pincus, Dow Jones reported.

Private investment partnerships, unlike publicly traded companies whose performance information is public by law, often prefer to keep results secret. They say the information gives a distorted picture of newer funds, which typically do less well in the early years.

UTIMCO startled and embarrassed many in the private investment industry in October by releasing performance data through its quarter ending Aug. 31 regardless of consent. The industry's discomfort grew when the action triggered similar actions by other public investment funds across the country. The University of Michigan, for example, released information on the funds in which it invests last month.

In California, the San Jose Mercury News went to court to force the state's pension fund to disclose how its venture investments did last year. The California Public Employees Retirement System had released information for the previous year, when tech investments were doing extremely well, but now was balking. In December, the fund agreed to release information on most of its funds.

Boldt said Cornyn's ruling was limited strictly to the return data through Aug. 31. A clause in the opinion stated that it "must not be relied upon as a previous determination regarding any other records or any other circumstances."

UTIMCO sent a letter Monday to Abbott requesting a new opinion in the matter, Dow Jones reported. A ruling is expected within about 45 days.

Boldt said the goal is to secure an opinion that would allow release of the information in the future, without returning to the attorney general for authorization each quarter.

Meanwhile, the return data that was released Monday varied widely, with many funds created during the last few years off substantially, Dow Jones reported.

UTIMCO reported an internal rate of return of 14.4 percent in an EnCap Energy Capital Fund created in 1997, for instance, but a return of negative 30.3 percent for an EnCap fund created in 2002.

Similarly, a 1997 Prism Venture Partners fund had an internal rate of return of 20.7 percent, according to UTIMCO, but Prism funds created in 2000 and 2001 were off 32.6 percent and 24.1 percent, respectively.

rhaurwitz@statesman.com; 445-3604