The so-called “expose” cited by sociology student John Bruning in his Oct. 19 commentary was riddled with factual errors, innuendo and conflation, and Mr. Bruning compounded those errors. Readers of the New University newspaper are entitled to the facts about UC investments and the role of its Regents.
To set the record straight: The UC has not invested in either Blum Capital or TPG Capital, as John Bruning erroneously stated.
It is doubly inaccurate to claim that UC “lost $3.14 billion in private equity investments proposed by Regent Richard Blum over just a few years” because, first, he had nothing to do with any of those investments and because private equity investments by the university have returned every dime invested back to the university with a residual market value one-and-a-half times invested capital since inception.
Contrary to the baseless claims of “immense conflicts of interest,” the UC has a strict policy to safeguard against self-dealing and conflicts of interest in UC investment decisions. The policy prohibits Regents from offering advice or other recommendations to the Treasurer’s office about selection of investments or investment managers. No one at the UC has received evidence of any instances in which a Regent has influenced the individual investment choices of the CIO or her staff.
The Treasurer’s office makes decisions about specific investments, investment managers or investment management firms, and hires outside managers to choose individual equity investments. The Regents’ role entails approving investment policies, asset allocation, performance benchmarks, risk budgets and investment guidelines.
In summary, the Treasurer’s office notes that the private equity asset class has generated more than $2.9 billion of profits since inception. Of the $6.9 billion committed to private equity funds, $4.5 billion has been contributed to the funds, while the remaining $2.4 billion is reserved for future investments by the private equity managers. The $4.5 billion of capital has generated $4.7 billion of cash distributions back to the university, with a remaining value of $2.7 billion. Hence, the $4.5 billion invested has generated $7.4 billion of total value or 150 percent of the original money invested. According to the Treasurer’s office, the private equity portfolio has been extremely resilient during a period of extreme turbulence.
It would be unusual if there weren’t some overlap between investments of Regents and UC investment portfolios, taking into consideration the magnitude and breadth of the billions of dollars worth of UC investments. Millions of investors are making the same decisions. One difference between other investors and Regents is that Regents’ holdings are disclosed as a matter of policy and state law.
To neglect and deny the existing transparency and policy while perpetuating misinformation is irresponsible. One fact-checking call on the part of the writer before publication of this commentary would have resulted in having the facts rather than misinforming thousands of UCI students, faculty and staff.
Associate VP of Communications, University of California