UNC Kenan-Flagler Business School

UNC KENAN-FLAGLER NEWS


Private Equity Fund gives students hands-on investment experience

5/2/2009

The University of North Carolina’s Kenan-Flagler Business School is giving students hands-on experience in running a private investment fund.

The students invest and learn from the changing economy while seeking to bring real returns to limited partners.

The UNC Kenan-Flagler Private Equity Fund is the first and only student-run fund at a leading U.S. business school that aims to provide real returns to its limited partners. It also gives the Kenan-Flagler Business School Endowment Fund with an opportunity to share in any profits.

Students manage all aspects of the more than $1.3 million in the fund. They raise capital, source deals, perform due diligence and make investment decisions. They also present their decisions to a faculty advisory investment committee and a board of directors.

The students look to the UNC alumni network to help source deals. They already have partnered with other private equity firms across the country. The average transaction is $20 million to $125 million. The fund can invest $100,000 to $150,000 per transaction.

Students raised capital in 2007. Now they can take advantage of lower valuations without scrambling for deals. They have invested in medical and technology companies. These sectors have weathered the recession better than other industries. Among the companies that the fund has invested in are:

  • iRhythm Technologies, which is developing a cardiac rhythm monitoring device that aids in the diagnosis of arrhythmias
  • TransEnterix Inc., which is pioneering technology in the area of “incisionless” surgery
  • National Clinical Research & Hampton Roads [Clinical] Research Center Inc., which are clinical research facilities that conduct Phase II and Phase IV clinical trials for pharmaceutical companies
  • Apex Analytix, which is a leading provider of technology-enabled recovery audit services and other specialized audits

The fund began in 2007. It recently recruited its third generation of students. The 12-person team includes MBA and BSBA students. They serve three-semester terms. They also take part in a series of private equity courses, lectures and activities.

The group’s first fund will be fully committed by the third quarter of 2009. Students will begin to raise capital for the second fund next fall. This Fund II will be open to qualified investors that are friends and family of the UNC community.

The economic crisis has provided a valuable learning experience for students.

“We are grappling with complex decisions amid a widened scope of risks. We have broadened our scope of due diligence. And we are benefiting from lower valuations and a five to six-year investment horizon to our LPs,” said Michael Kopeikin (MBA ‘10), fund director. “We are committed to getting the best return given realistic values. We co-invest with top quartile fund managers on leading transactions and think about how traditional exit strategies are changing. We are leveraging each members’ expertise and the expertise of our LPs to get our investments right.”