Investure, Llc, and Smith College

21 Pages Posted: 21 Oct 2008

See all articles by dorothy J Kelley

dorothy J Kelley

affiliation not provided to SSRN

Susan Chaplinsky

University of Virginia - Darden School of Business

Robert S. Harris

University of Virginia - Darden School of Business

Abstract

Alice Handy, an investment professional with 30 years' experience as head of the University of Virginia Investment Management Company, has opened a new asset management firm targeted at midsize endowments and nonprofit institutions in January 2004. Her business, Investure, LLC, offered outsourced investment services to institutions with $150 million to $1 billion in assets and access to top-performing managers at lower cost than a fund of funds (FoF). Smith College, a prestigious liberal arts college with a nearly $1 billion endowment, is interested in increasing its current allocation to private equity. Handy and her partner are preparing to meet with Smith's trustees in an attempt to win Smith College as Investure's first client. The case presents three different approaches to private equity investing: direct investment through a traditional limited partnership, investment through a FoF, or investment through Investure's outsourced model. The class discussion presents an opportunity to evaluate advantages and shortcomings of each approach, introduce key terminology, and discuss the current trends in the private equity market. Students are given the cash inflows and outflows for a representative investment in a venture capital fund of the type Handy hopes to invest in on behalf of Smith College. The main analytical task requires students to evaluate the expected gross and net returns generated by the representative investment under each of the different approaches and fee structures.This case was written for an early class in courses on entrepreneurial finance, venture capital, or private equity. It can also be used in specialized courses for fund trustees interested in alternative assets.

Excerpt

UVA-F-1537

Rev. Oct. 25, 2013

INVESTURE, LLC, AND SMITH COLLEGE

In January 2004, Alice Handy's new investment advisory firm, Investure, LLC, was attempting to land its first client, Smith College, an elite liberal arts college located in Northampton, Massachusetts, with a $ 913 million endowment. Handy, fresh from her previous position as chief executive officer of the University of Virginia Investment Management Company (UVIMCO), had 25 years of experience managing money and a track record of success. Over her career, Handy had directed increasing amounts of funds to a class of investments known as “alternative assets,” which included a range of investments other than publicly traded stocks and bonds. She had also developed a philosophy about their use and principles that she hoped would guide her new company to success. Mindful that in the investment world “past returns were no guarantee of future returns,” Handy knew she would face challenges from the unprecedented flow of funds into alternative assets and competition from other advisors. Building a business would also require time, energy, and persistence. All of these concerns, however, were in the back of her mind. In the forefront was Smith College's endowment. She and her partner, Bruce Miller, were eager to review Smith's current portfolio and prepare asset allocations that would position the endowment for future success.

. . .

Keywords: nonprofit, private equity, venture capital, limit partnerships, investment management

Suggested Citation

Kelley, dorothy J and Chaplinsky, Susan J. and Harris, Robert S., Investure, Llc, and Smith College. Darden Case No. UVA-F-1537, Available at SSRN: https://ssrn.com/abstract=1279964

Dorothy J Kelley

affiliation not provided to SSRN

Susan J. Chaplinsky

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4810 (Phone)
434-243-7676 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/chaplinsky.htm

Robert S. Harris (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4823 (Phone)
434-924-4859 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/harris.htm

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