Yudof, head of UT board want to end investment fund secrecy

By Sharon Jayson
Wednesday, September 18, 2002

The University of Texas System's top two leaders said Tuesday that they want full disclosure by the investment corporation that manages a multibillion-dollar portfolio for the UT and Texas A&M University systems.

Chancellor Mark Yudof and UT Board of Regents Chairman Charles Miller reiterated the need for openness, despite attempts by the University of Texas Investment Management Co. to keep under wraps some performance information about its private equity investments and fund managers. The management company board -- which includes three UT System regents, the UT System chancellor, five investment professionals and at least one regent from the A&M System -- last fall limited regular disclosure of such information.

Bob Boldt, who became UTIMCO president and chief executive officer in April, defended the decision to withhold information when some investment partners and partnerships insist on such an arrangement.

"I don't want to be in an argument with the chairman or the chancellor," Boldt said. Some investors "feel that withholding information is important because many of the better partnerships simply won't do business with people who disclose information that they want to keep private."

UTIMCO has asked for clarification from the state attorney general's office about what investment information it is required to make public. Its board members also plan to take up the question today during a meeting in Dallas.

Created in 1996, UTIMCO manages a $14.5 billion portfolio, including the public endowment called the Permanent University Fund, which provides money for both university systems. The portfolio includes venture capital partnerships, corporate bonds and real estate investment trusts.

The UTIMCO board and the UT Board of Regents agreed to make public information about the overall performance of private equity investments made since 1983 -- including individual fund managers -- after a series of newspaper reports in 1999 that questioned UTIMCO's policies. Although UTIMCO's quarterly reports still include the overall investment performance, they no longer contain information about how individual managers performed.

Yudof is calling for openness. Describing himself as a "full-disclosure guy," Yudof said Tuesday that he plans to make his feelings known at today's meeting. He said he has also told Boldt and UTIMCO board member Woody Hunt, who is also a UT regent, how he feels.

"I think in the 21st century, given all the allegations in corporate governance and so forth, I want full disclosure, and that is my position as a board member," Yudof said. "I don't think it's bad faith on their part. It's to protect the investment strategies, but I think in the long run, that is not what the public wants, and I don't think it will jeopardize investments."

Miller, the regents chairman, said that he will add the issue of public disclosure to the agenda of a special regents meeting in Austin on Saturday. That meeting had been called to discuss selecting a president for the UT Health Center at Tyler, but Miller said he wants to use the opportunity to ask the UT System regents to weigh in on the UTIMCO issue.

"We have a policy of full disclosure, and that's not going to change," Miller said. "We're going to be as open and fully transparent as any fund anywhere.." Although Miller acknowledged that "there's been some holding back of data," he said he thinks the UT regents and the UTIMCO board realize that the disclosure policy is "not spelled out as it could be."

Yudof, who became chancellor in August, said he wants to put to rest any questions about UTIMCO's policy."I hope to put this behind us and come out on the pro-disclosure side," he said.

sjayson@statesman.com; 445-3620