Private Debt and a University's Endowment Portfolio Decision

This fictional case is written from the perspective of Benjamin Owens, an investment director at Blue Ridge Mountain University (BRMU). Owens is a member of the investment team that manages the school&apos;s $5 billion endowment. He participates in all aspects of endowment management, including asset allocation, investment research, and investment manager selection. He is currently researching private debt to determine whether BRMU should make an allocation to the growing asset class; specifically, he is assessing the merits of an investment with JAM Capital Management, a private-debt fund manager led by Andrew Moneymaker. The case is focused on direct lending, the largest segment of the private-debt industry. It is accompanied by a technical note on private debt (UVA-F-2107) that introduces the private-debt industry and discusses the different types of private debt and the drivers of its growth, including regulatory changes after the global financial crisis (GFC) that limit banks&apos; ability to lend and the rise of private equity following the GFC.The case introduces students to private debt as an asset class and direct lending as a subcomponent of the asset class, using endowment management and manager selection as an avenue for exploring this industry. At the University of Virginia Darden School of Business, this case is used in the second-year elective, “Financial Institutions and Markets.” Private debt is a natural topic in this course, as the asset class has grown dramatically following the GFC and has become an alternative source of debt for borrowers outside of the banking sector. The case can also be used in a course on private capital, private markets, investments, asset management, or private wealth.<p>Excerpt</p><p>Private Debt and a University&apos;s Endowment Portfolio Decision</p><p>On a crisp fall Monday, Benjamin Owens, an investment director at Blue Ridge Mountain University (BRMU), and Franklin Borrows, the university&apos;s chief investment officer (CIO), were sitting together in a conference room at their office in downtown Charlottesville, Virginia. They had been discussing a potential investment opportunity for the university&apos;s endowment. The duo had just left a meeting with Andrew Moneymaker, the founder and portfolio manager of JAM Capital Management (JAM). Moneymaker had made his final pitch to the BRMU investments team members to try to persuade them to make a commitment to Fund IV, JAM&apos;s next private-debt direct-lending fund.</p><p>Owens had been with BRMU&apos;s investment team for the last five years. His team was responsible for overseeing all aspects of the management of the university&apos;s $5 billion endowment, including portfolio management, asset allocation, and investment manager selection.</p><p>. . .</p>