CHARLOTTESVILLE, Va. – In an effort to streamline private equity investment strategies for its limited partners, The Investment Fund for Foundations (TIFF) recently split its alternative investment fund-of-funds into two separate vehicles, expecting a $75 million final close on the revamped TIFF Partners III by the end of March.
TIFF, a non-profit organization created to provide foundations with access to otherwise inaccessible private equity vehicles, launched its third fund-of-funds in October with a target of $125 million. The organization, founded in 1991, introduced its first alternative asset fund-of-funds in 1996, focusing on domestic venture capital and buyout partnerships, foreign buyout funds and energy-related and real estate vehicles (VCJ, January 1998, page 28).
TIFF, however, announced in December that it would split its private equity fund-of-funds into two vehicles to provide member foundations with greater investment flexibility. Thus, TIFF Partners III, which held a $48 million initial close in January and will invest in domestic private equity and international buyouts, trimmed its target to $75 million, while the organization planned to launch TIFF Realty & Resource Partners I in mid-April.
TIFF III, which does not have specified allocations for VC, buyout and international commitments, will opportunistically invest an average of $5 million to $7.5 million per vehicle, according to what the market dictates. Brentwood Associates VIII, Draper Fisher Jurvetson Fund V and Mohr, Davidow Ventures V were among the venture partnerships in which TIFF II invested.
Creating two funds-of-funds gives TIFF’s limited partners greater choice in determining their appropriate tolerance for return and risk. For example, some foundations may already be heavily invested in real estate partnerships and feel the need to boost private equity investments through TIFF, said Meredith Shuwall, managing director of the organization’s private equity vehicles.
Despite its revamped focus, TIFF III has had little trouble attracting investors, and the organization has been pleased with its fund-raising efforts. “It’s exceeded our expectations,” Ms. Shuwall said.
TIFF, whose limited partners invest between $250,000 and $15 million in funds-of-funds, gives smaller foundations exposure to quality private equity managers whose capital requirements make direct investments nearly impossible, Ms. Shuwall said. Investors in TIFF’s prior private equity vehicles include the Woods Hole Oceanographic Institution, Duke (family) Endowment, the Museum of Modern Art, the Brookings Institution, the Commonwealth Fund, the Rockefeller Brothers Fund, the Carnegie Hero Fund Commission, the Public Welfare Foundation and the William T. Grant Foundation.