{"text":[[{"start":6.7,"text":"Harvard University’s $57bn endowment is facing a private-markets hangover: billions of dollars in unfunded commitments to private equity funds at a time when the university faces rising demands for cash."}],[{"start":19.85,"text":"The backlog has risen from $4.6bn in 2017 to $7.9bn in 2025, according to public records, a legacy of Harvard Management Company’s aggressive move into private capital investments in the last decade. People with knowledge of the matter said the figure remained “elevated” this year."}],[{"start":39.05,"text":"“It’s really this vicious circle that they have more and more of these commitments. The distributions just have not been coming in and the unfunded commitments pile up,” said Philip Casey, chief executive of Institutional LPs, a technology company that works with endowments. “The question is: have they been writing cheques that they can’t cash?”"}],[{"start":58.55,"text":"Harvard declined to comment. "}],[{"start":60.449999999999996,"text":"Other large university endowments also face increased unfunded commitments after the private equity binge of the early 2020s, but Harvard’s backlog remains unusually large, according to public records."}],[{"start":73.69999999999999,"text":"The endowment’s chief executive, NP “Narv” Narvekar, has told the board in recent months that he plans to retire as early as 2027, the people said, and the reckoning will have to be managed by whoever Harvard chooses to replace him. His planned departure follows a tenure of more than a decade in which the largest US university endowment raced to catch up to the long-term investment performance of its peers. "}],[{"start":97.99999999999999,"text":"Narvekar did not respond to a request for comment. "}],[{"start":101.74999999999999,"text":"HMC’s surge in private equity exposure came as the asset class boomed but then struggled to return cash to investors amid a slowdown in listings and acquisitions for PE portfolio companies. "}],[{"start":116.14999999999999,"text":"For Harvard, one area of pressure is Covid-era private equity and venture capital funds, many of which invested at elevated valuations and may now find it harder to exit portfolio companies profitably, potentially weighing on future distributions and returns for the endowment, the people said."}],[{"start":133.29999999999998,"text":"Such commitments are not due immediately. Investors pledge capital to private equity funds but typically hand over the cash only when general partners issue capital calls to finance deals, fees or follow-on investments. The risk for HMC is that those calls continue even as distributions from older funds slow."}],[{"start":153.39999999999998,"text":"One of Narvekar’s priorities after joining HMC in 2016 was to increase its exposure to private markets. In an October 2019 letter, he said the endowment’s “central concern” was that its “allocation to buyouts, growth, and venture capital continues to be low relative to what likely makes sense for Harvard”."}],[{"start":174.14999999999998,"text":"HMC’s allocation to private equity rose to 41 per cent in 2025 from 16 per cent in 2017."}],[{"start":182.34999999999997,"text":"The strategy paid off during the dealmaking boom of 2021, when HMC posted a record 33.6 per cent return, but later left the endowment exposed to a sharp slowdown in exits as higher interest rates weighed on IPOs and acquisitions."}],[{"start":198.39999999999998,"text":"HMC reported a loss in 2022 and returned 2.9 per cent in 2023. Although performance recovered to near or above double digits over the following two years, Narvekar acknowledged in his 2025 annual letter that returns were “dampened by having less public than private equity” that continues to struggle with exit difficulties."}],[{"start":220.39999999999998,"text":"“HMC under Narvekar took higher risk and got lower return,” said Mark Williams, a lecturer at Boston University who has studied HMC. “That’s just failure in proper and strong risk management.”"}],[{"start":232.89999999999998,"text":"Harvard faces growing pressure on its finances from federal funding cuts and a higher excise tax on endowment income that takes effect in July. The university relies on endowment payouts for more than a third of its operating revenue, making the performance and liquidity of HMC’s portfolio increasingly important."}],[{"start":252.39999999999998,"text":"Cash alone would not be enough to meet the commitments if they were called in full. HMC’s 2025 annual report showed cash at 3 per cent of the endowment, or roughly $1.7bn. But the obligations are drawn down over time, and HMC also holds liquid and semi-liquid assets, including public equities, bonds and hedge fund allocations it could call upon."}],[{"start":276.34999999999997,"text":"The large multiyear capital-call obligation now sits alongside rising university cash needs."}],[{"start":283.09999999999997,"text":"The unfunded commitment “is a very significant liability at a time when Harvard is really having this challenge of matching their short-term cash flow needs with their long-term assets in the endowment”, said Casey. “They have this very significant asset-liability mismatch.”"}],[{"start":300.2,"text":"Hunter Lewis, who advised Harvard on the creation of HMC in the 1970s, said HMC’s next chief should focus less on chasing higher returns and more on cutting exposure to private markets and holding more public equities and fixed-income assets that can be readily sold to meet growing cash needs."}],[{"start":320.05,"text":"“You need liquidity to deal with whatever happens,” he said."}],[{"start":331.95,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779430156_9278.mp3"}