peHUB-New Harvard private equity chief faces high expectations

Mon Mar 17, 2014 10:22pm EDT

* Richard Hall was previously at Teacher Retirement System of Texas

* Position has been vacant for most of past year

* Head of Harvard endowment wants bigger private equity returns

By Chris Witkowsky

NEW YORK, March 17 (Reuters-peHUB) - Richard Hall, head of private equity at Teacher Retirement System of Texas, is taking over as head of private equity at Harvard Management Company, which runs Harvard's $32.7 billion endowment.

HMC has been without a PE chief for most of the past 11 months. Peter Dolan ran the program for 18 years, but resigned in April 2013. The position remained vacant for eight months, until Harvard promoted Lane MacDonald to take over. But after just two months on the job, McDonald left to be president of Crosby Advisors, a family office.

Hall, who starts the new job in April, was unavailable for comment.

"Hall brings significant and deep expertise across private equity investments, other private assets and global M&A," HMC President and CEO Jane Mendillo said in a prepared statement.

Hall faces big expectations. Mendillo last September expressed disappointment with the performance of the endowment's private equity portfolio, characterizing it as "fair." The PE portfolio returned 11 percent in fiscal 2013, which was "well below" the return on public equities and only slightly above the 10.6 percent benchmark Harvard set, Mendillo wrote in a letter accompanying HMC's fiscal year report.

Because investments in PE funds are locked up for years before those funds return capital to LPs, Harvard expects an "illiquidity premium" over public markets, Mendillo wrote. "Over the last 10 years, however, our private equity and public equity portfolios have delivered similar results."

To improve its PE returns, Harvard is "actively focusing on honing our private equity strategy to maintain the highest concentration in the very best managers with the greatest potential to add value," Mendillo wrote.

Hall took the private equity helm at Texas Teachers' in 2012 after another limited partner legend, Steve LeBlanc, decided to leave the public system. Hall had been with the system working on private equity since 2008.

Prior to Texas Teachers', Hall worked at Banc of America Securities, where he was vice president of real estate investment banking. Before that, he was director of corporate development and strategy at Tomkins.

Earlier in his career, Hall worked in direct investments at Dell Ventures. Before his career in finance, Hall served as an intelligence officer in the U.S. Navy for six years, earning the rank of lieutenant.

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