The University of California contends that the performance information is trade secrets and therefore is exempt from disclosure under the California Public Records Act, as well as noting that the forced disclosure of such confidential information would prompt venture-capital and other private-equity firms to bar the university from investing in their funds. Additionally, UC says it already freely discloses a “great deal of information on the investment performance of its retirement and endowment assets on a quarterly basis.”
David H. Russ, University of California treasurer, said that UC already discloses:
- overall total portfolio performance and sub-asset class performance, including aggregate performance for the private equity portfolio;
- how much is invested in each private equity partnership;
- the number of shares held; and
- the market value of each such investment.
In announcing its appeal, UC noted that its private-equity investments are the best performers in its portfolio, gaining more than 32% a year in the five-year period through June 2002. The university’s private-equity investments gained 35.9% over the past 10 years and 32.5% over the past five years through June 30, compared with the university’s policy benchmark of 16.7% for the 10-year period and 8.4% for the five-year period (see UC Files Appeal In Venture Capital Disclosure Case) .
UC has already suffered adverse consequences from the lower court ruling. Late last month Sequoia Capital terminated UC from its newest partnership and asked the University to liquidate its current holdings in 10 other Sequoia funds (see Sequoia Chopping Off UC Venture Ties ). Sequoia noted that it took the action in response to the lower court’s decision (see CA Judge Orders UC Venture Capital Data Release ).
In April the Coalition of University Employees and the San Jose Mercury News had filed suit calling for the disclosures, arguing that UC is required to disclose the information under state public records laws (see University of California Hit With VC Disclosure Suit ). The suit followed decisions by the California Public Employees’ Retirement System (CalPERS) to disclose the same information after it was sued by the Mercury News (see CalPERS to Go Public With Private Equity Info ). Several other institutions have also since released similar information, including the University of Michigan and the California State Teachers’ Retirement System.
As of June 30, 2003, UC’s assets under management totaled $53.25 billion, with $646 million in private equity. This includes private equity assets of $531 million in pension funds and $115 million in endowment funds.