Harvard to Invest $150 Million in Startup Buyout Fund

(Bloomberg) -- Harvard University is helping to anchor one of the biggest private equity fund launches in the U.S. in almost a decade.

Harvard Management Co., which oversees the university’s $39 billion endowment, allocated about $150 million to Arcline Investment Management’s debut buyout fund, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public.

Arcline in September spun out of Golden Gate Capital, a San Francisco-based buyout firm managing more than $15 billion for investors including Princeton University. The new firm is led by Rajeev Amara, a former managing director who was with Golden Gate for 18 years and oversaw acquisitions of industrial companies like specialty lab equipment maker Cole-Parmer in 2017.

The startup raised $1.5 billion for its first fund from endowments, foundations, sovereign wealth funds and family offices, it said in a news release on March 12, without naming specific backers. Arcline’s haul is the biggest for a buyout debut in the U.S. in at least eight years, according to data compiled by Preqin, and it exceeded the firm’s target raise of $1.25 billion.

Representatives for Arcline and Harvard declined to comment.

Arcline’s other clients include the Texas Municipal Retirement System, which last month approved investing $50 million in the fund, according to public documents. San Francisco-based Arcline will employ the same strategy its principals honed at Golden Gate, with a plan for its first fund to buy about 10 middle-market industrial companies, according to the pension board documents.

Harvard used to be an investor in Golden Gate -- investing in that firm when it launched its first fund in 2001 -- but isn’t currently, according to people familiar with the matter.

A spokeswoman for Golden Gate declined to comment.

Golden Gate was co-founded by David Dominik, the former head of Bain Capital’s California office. Arcline isn’t the first spin out from the firm -- Stefan Kaluzny and Peter Morrow left in 2011 to start distressed retail specialist Sycamore Partners, which owns companies such as Staples Inc.

Harvard has been boosting bets on private equity, its best-performing asset class, as it overhauls its endowment strategy. The university’s private equity holdings increased about 11 percent to $8.5 billion in the year ended June 30 even as it unloaded about $1 billion of stakes in buyout and venture funds that had fallen out of favor, according to data from the university’s annual report.

To contact the reporter on this story: Michael McDonald in Boston at mmcdonald10@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Melissa Karsh, Josh Friedman

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