By: R.G. RATCLIFFE
Houston Chronicle Austin Bureau
September 29, 2002, Sunday

AUSTIN - The Texas higher education trust fund president said Saturday he is withholding information on the state's $1.7 billion private equity portfolio so individual managers can ask a court to block public disclosure of their profits and losses for the Permanent University Fund.

The portfolio had lost 15.96 percent of its value in the year ending July 31.

Texas Attorney General John Cornyn, responding to an open records request from the Houston Chronicle, ruled last week that the rates of return for the private equities managers are public records and that the University of Texas Investment Management Co. must release them within 10 days.

UTIMCO President Bob Boldt said he plans to withhold most of the records until 5 p.m. Friday to give the limited partnerships that manage the investments a chance to fight Cornyn's ruling in court.

"Some of the general partners are really upset over this," Boldt said. "We feel that it's only fair to give them the opportunity to go to court if they want to."

Since the University of Texas renewed its private equity investment program in 1995, the PUF has invested $1.7 billion with private partnerships that have returned $948 million to the fund. The portfolio's current value is $1.3 billion.

Private equities are partnerships that invest directly in companies rather than stocks or bonds. The Permanent University Fund invests money for the University of Texas and Texas A&M University systems, and it is managed by UTIMCO.

UT and UTIMCO officials had promised in March 1999 that the investment returns of individual managers would be made public after the Houston Chronicle reported that almost $500 million of the investments had gone to partnerships linked to UT regents or then-Gov. George W. Bush.

>But UTIMCO reversed that policy in October 2001 and fought the Chronicle on release of the records. After the Chronicle reported on the renewed secrecy, the UT Board of Regents and the UTIMCO board of directors did another about face, voting to make the records public.

But the UTIMCO directors were worried about being sued by the partnerships because some had confidentiality clauses in their contracts. Cornyn gave UTIMCO cover last week by ordering the rate of return and investment value information released to the Houston Chronicle in whole or in part within 10 days.

UTIMCO declined on Friday and Saturday to release any information to the Houston Chronicle. However, UTIMCO made a partial release of information available Friday to the Austin American-Statesman.

Boldt released records on 41 of the 125 partnerships that manage current private equity investments for the PUF and 21 private investments that have been completed. Private investments typically last from five to 12 years.

The remaining 84 partnerships have not granted written permission for the release of their records, but Boldt told the American-Statesman that he expects all but 20 will.

Boldt told the Chronicle that he could not comply with Cornyn's ruling to release the records requested by the Chronicle because that would end the private partners' ability to go to court.

"If I released the records to you, it would be a moot point," Boldt said.

Boldt promised to make a partial release of records available to the Chronicle on Monday, but he described it as a "first glimpse" of the portfolio's operations.

Previous records obtained by the Chronicle showed some of the investments with personal or political connections were modestly successful, while others lost money. The most successful investments, from the records that could be publicly viewed, were not ones with connections to state officials.

One of the investments made public to the American-Statesman was the International Cargo Network, a 1990 investment of $11.6 million made directly by the UT regents. It lost 95 percent of the money. The son-in-law of a then-regent and a financial adviser to the regents were co-investors in ICN.

It is not clear from the American-Statesman report whether UTIMCO released the remaining value of its individual investments. While the rate of return tells you the value of an investment over time, the remaining value tells you how much money an investment has made or lost in actual dollars.