September 12, 2007
UNIVERSITY OF HOUSTON SYSTEM
BOARD OF REGENTS
ENDOWMENT MANAGEMENT COMMITTEE
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Members Present:
Michael J. Cemo, Chair
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The University of Houston System Board of Regents Endowment Management Committee meeting convened in Room 220 E. Cullen, University of Houston, on Wednesday, September 12, 2007. Noting the presence of a quorum, Chairman Cemo called the meeting to order at 10:03 a.m.
Regent Cemo stated that the action items would be taken out of order. He then turned the meeting over to Mr. Jim McShan to provide an update to the Committee. Item C and then Item B was discussed.
Action Items:
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Appointment of an Investment Consultant – UH System
Approval is requested to retain Cambridge Associates as the Investment Consultant for the UH System’s endowed and non-endowed funds for another five-year period. Cambridge Associates was retained by the System as its investment consultant in 2002 after a search process. In June 2007, a Request for Proposal (RFP) was distributed to 12 firms to serve as investment consultant. The RFP was also posted on the Texas Building and Procurement Commission’s website. System staff evaluated the 10 qualified proposals received to determine the ability of each firm to fulfill the System’s current and future needs, the alignment of the firm’s business profile to the System’s preferences, and the cost of services to be provided by each firm.A summary of the evaluations was distributed at the meeting for reference. After further review, the committee recommended that the board extend the contract to Cambridge for a five-year term, with the option that the Committee review them on an annual basis. Regent O’Connor complimented the staff on their due diligence. A copy of this report is on file in the board office.
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Appointment of Endowment Investment Manager(s) – UH System
The Endowment Management Committee received a report from the System’s investment consultant, Cambridge Associates, which identified various firms for consideration as investment managers for the endowment fund.Bruce Myers and Hamilton Lee of Cambridge Associates recommended to the committee that the board replace Arnold & S. Bleichroeder, who currently manages about $65 million in international equity assets for the endowment fund. One stipulation for the new potential investment manager for the Endowment is that they must agree to the alternative dispute resolution (ADR) under Texas law. Of the four managers Cambridge selected for inclusion in this search, only one is able to agree to these terms, Alliance Bernstein.
Cambridge did an analyses of the four managers and distributed this to the committee for their reference. This was discussed in much detail.
Alliance Bernstein representatives, Morgan Harting, CFA, Senior Portfolio Manager, Global Value Equities and Joe Lawrence, Regional Director, Southeastern US Institutional Investments, gave an overview of the company and their products. A copy of their material is on file in the board office.
After much discussion, the committee recommended the liquidation of the assets held by Arnold & S. Bleichroeder and retain Alliance Bernstein as their replacement.
Mr. McShan stated that the third item, Overview of Endowed and Non-Endowed Assets – UH System, would not be discussed.
Regent Cemo thanked Cambridge Associates and the UH investment staff for their due diligence on this issue. Regent Cemo moved approval of the action items as presented. Regent O’Connor seconded the motion, which passed unanimously. The Committee will present for final board approval the Appointment of Endowment Investment Manager, Alliance Bernstein, and the renewal of Cambridge Associates and the Investment Consultant for the UH System for an additional five-year term, at the Special Called Board of Regents meeting to be held at 12:30 p.m. today, September 12, 2007.
There being no further business to come before the committee, the meeting adjourned at 12:00 noon.
All documentation submitted to the Committee in support of the foregoing action items, including but not limited to “Passed” agenda items and supporting documentation presented to the Committee, is incorporated herein and made a part of these minutes for all purposes; however, this does not constitute a waiver of any privileges contained herein.
| Others |
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John M. Rudley
Jim McShan Dona H. Cornell Raymond Bartlett Bruce Myers Hamilton Lee Janis Newman Gerry Mathisen |
