University of Michigan eyeing digital infrastructure fund, Beijing VC offering

The $12.9 billion endowment for the University of Michigan is considering two new commitments within its already sprawling alternative investment program at today’s board meeting. A $50 million commitment was recommended to trustees to the SDC Digital Infrastructure Opportunity Fund II, which makes ‘opportunistic’ investments in the digital infrastructure market, including data centers. SDC Capital Partners was founded in 2017 by Todd Aaron with a focus on mission-critical infrastructure including the development of data centers for strong-credit customers in North America and Europe. One of SDC’s recent investments was in Fatbeam Holdings LLC, acquiring a majority stake in the firm that is a provider of purpose-built fiber infrastructure services to enterprise, education, healthcare, government and carrier customers in the western U.S. According to a staff memo, University of Michigan’s investment “offers the long-term portfolio the opportunity to invest alongside an experienced team focused on a fast growing, underserved market segment. The second investment detailed in meeting documents is a $10 million commitment to a Beijing, China-based venture capital firm specializing in early-stage technology companies. Miracle Plus Fund I seeks Chinese companies that are leveraging technology to solve deeply technical problems, officials said. Miracle Plus was founded last year by Qi Lu, who invests via an accelerator batch program that is offered twice a year for serial entrepreneurs and individuals with highly technical backgrounds. The firm also plans to invest selectively in graduates from that program. Trustees at the board of regents meeting also received details of follow on investments over the course of the last several months. These add on allocations are: BioPharma Credit Investments V ($30 million); Kartesia Credit Opportunities V Feeder SCS ($25 million); HealthCap VIII ($33 million); General Catalyst Group IX ($2.5 million); Patron Capital Feeder VI ($49 million); and Roark Diversified Restaurant Fund II ($50 million). Overall the alternative investment portion of the university endowment continues to grow and at $7.2 billion accounts for more than half of the overall investment portfolio. The largest alternative investment sector remains absolute return strategies, which are housed in the marketable securities portfolio and total $2.9 billion. The hedge fund portfolio returned 3.56% in 2019.

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