Business
Yale’s Endowment Selling Private Equity Stakes as Trump Targets Ivies
Yale University’s famed endowment has been trying to offload one of the largest portfolios of private equity investments ever in a single sale, a move that reflects the pressures on both Wall Street and higher education under the Trump administration.
The Ivy League school has sought buyers for up to $6 billion in stakes in private equity and venture funds, according to three people briefed on the sales process, amid uncertainty about its federal funding and the reality that many of these investments have not delivered the outsize returns that Yale expected.
Yale is now close to completing a sale of roughly $3 billion of the portfolio and is selling the assets at a slight discount, one of the people said.
“This is a big deal,” said Sandeep Dahiya, a professor of finance at Georgetown University who has conducted research on the performance of endowments. “The investor that was the lead architect of investing in the private equity markets is pulling in its horns.”
For decades, Yale has been regarded as a pioneer for shifting its investments away from stocks and bonds into longer-term holdings managed by private equity and venture capital firms. But last year, Yale’s $41 billion endowment generated returns of just 5.7 percent, underperforming the S&P 500 and other major indexes. Yale said its 10-year return averaged 9.5 percent annually.
Private equity investments typically generate cash for endowments and other investors after they sell or take public the companies in which they have invested. But lately, private equity and venture firms, which make up about half of Yale’s endowment, have struggled to sell their stakes in companies and return cash to investors. That has driven down returns.
Yale’s quest to exit investments in both well-known firms like Bain Capital and lesser-known ones like Golden Gate Capital, Clayton Dubilier & Rice and Insight Partners is a sharp U-turn for an endowment that has long proselytized the value of private equity and other long-term investments.
Knowing that some stakes would be harder to sell than others, Yale’s bankers offered potential bidders two separate lists of funds: “core” funds, the ones they most wanted to sell, and “sweeteners,” the better-performing ones, according to two of the people briefed on the sale.
While buyers would receive only a small discount of about 5 percent on the private equity stakes, Yale willingness to sell assets that were once highly desirable at less than full value reflects the industry’s challenges.
The sale comes at a critical juncture for universities. While President Trump has spared Yale the kind of punitive funding cuts he has leveled against other Ivy League schools such as Harvard, Yale is grappling with decreases in federal research funding that have hit higher education broadly. Republicans in Congress have also proposed steep tax increases on endowments.
Yale is on track to spend roughly $2.1 billion from its endowment in 2025, which accounts for just over one-third of its annual budget.
In a statement provided to The New York Times, a representative for the Yale endowment acknowledged the sale, but called private equity “a core element of our investment strategy.” The statement added, “We are not reducing our long-term target to private equity.” The university said it was also looking to invest in other private equity firms.
Yale’s bankers tried to keep the process discreet by giving the sale the code name Project Gatsby. (Two of the main characters in F. Scott Fitzgerald’s novel set in the roaring 1920s went to Yale.) But Yale’s move is widely viewed on Wall Street as a harbinger.
At least two other large universities are preparing to sell some private equity assets, and dozens of U.S. and Asian pension funds are also looking at exits.
Lawrence Siegel, a former director of research at the Ford Foundation, called Yale’s move “a wake-up call” for investors.
“It’s also Yale trying to get out before everyone else,” Mr. Siegel said.
The Swensen Model
When David Swensen, a former Lehman Brothers banker, joined Yale as its chief investment officer in 1985, the university’s endowment was valued at about $1.3 billion. (Harvard’s had $2.7 billion.)
During 2021, the year that Mr. Swensen died, Yale’s endowment had swelled to $42.3 billion, behind Harvard but billions ahead of almost every other university endowment.
To achieve that, Mr. Swensen shifted Yale’s investments from a traditional portfolio of 60 percent stocks and 40 percent bonds. After getting to know fund managers in private equity and venture firms, Mr. Swensen moved a relatively large slug of Yale’s endowment into long-term assets, often investing in those funds for decades.
Other universities watched Yale’s returns and started to follow the Swensen Model, as it came to be known.
Yale’s early affection for private equity provided the perfect advertisement for an industry looking to attract new investors.
“Do you want to be smart like Yale?” said Ludovic Phalippou, an economist at the University of Oxford, in describing the pitch.
University endowments now invest an average of about 17.1 percent of assets in private equity funds, according to studies by the National Association of College and University Business Officers. That’s up from just 5.4 percent in 2007 before the financial crisis.
Universities and private equity firms have developed a symbiotic relationship. Endowments typically pay private equity firms roughly 2 percent of the money they manage and 20 percent of the profits they generate.
Those fees have helped mint slews of billionaires, many of whom sit on university boards and make large donations to the schools.
Yale’s senior trustee, for example, Joshua Bekenstein, has worked at Bain Capital since its inception in 1984, four years after he graduated from Yale. The Boston-based firm was one of the earliest to jump into the buyout business. It scooped up companies like Dunkin’ Donuts, Clear Channel Communications and Gymboree, added debt and then tried to sell them for a profit. Gymboree, a children’s clothing retailer, filed for bankruptcy seven years after Bain bought it.
Bain now manages $185 billion, including at least roughly $1 billion for Yale.
For more than a decade after the financial crisis, U.S. private equity firms reliably generated average returns, on paper, in the mid- to high teens, according to the data provider PitchBook. But the firms generated average returns below 10 percent in 2022 and 2023, and just over 10 percent in 2024.
Another challenge: Deal making has been slow for several years, and private equity firms have had difficulty selling stakes in companies and returning cash to investors at levels reached in previous years. Despite optimism that the second Trump administration would spur a deal-making resurgence, the volatility around tariffs has made companies wary.
In 2024, the firms returned about 15 percent of the value of their funds to investors in cash, compared with between 25 and 35 percent in prior years, PitchBook data shows.
The winnowing returns come after private equity firms, from 2021 to 2024, raised record sums from pensions, endowments and sovereign wealth funds, PitchBook data shows.
Steven Meier, chief investment officer for the New York City Retirement System, acknowledged that returns for private equity “haven’t been great.”
The system, which manages a $280 billion investment portfolio for the pensions of teachers, firefighters and other public employees, just sold $5 billion of its stakes in private equity firms. Mr. Meier said the city would continue investing in private equity but was looking to pay lower fees.
He added that the funds’ recent returns to pensions and endowments had also been “disappointing.”
Project Gatsby
When Yale’s bankers at Evercore Partners began shopping the endowment’s private equity portfolio in April, they didn’t disclose the seller’s identity.
But they left a clue: They called the sale Project Gatsby.
Bidders were asked to select funds from a combination of the “sweetener” and the “core” pool of assets and to name their price by May 6, with Yale’s bankers aiming for a June 30 closing, according to sales documents viewed by The Times.
Some details of Yale’s sale were reported earlier by Secondaries Investor and Bloomberg.
The biggest single position that Yale has been shopping is a roughly $600 million stake in a 2007 fund run by Golden Gate Capital, a San Francisco-based private equity firm known mostly for investing in retailers like Ann Taylor, Eddie Bauer and PacSun. Two people familiar with the sale said Yale did not expect to sell the entire stake.
The Golden Gate stake was marketed as part of the core portfolio, among the assets that the bankers most wanted to sell.
Evercore’s bankers also offered stakes in Insight Partners and General Catalyst. At least one stake that was labeled a “sweetener,” Clayton, Dubilier & Rice, was not expected to be sold because Yale has been able to get the price that it wanted on other stakes, according to two people familiar with the sale.
Yale has also been offering to sell nine funds managed by Bain Capital, with a total value of about $1 billion. A person familiar with the deal said the school was on the verge of selling about $500 million worth of those Bain stakes.
Walt Disney Co.’s ABC has filed renewal applications with the Federal Communications Commission “under protest” after an order mandating a years-early review of the network’s eight television station licenses.
The criticism was part of the network’s applications for the FCC review, which were filed ahead of a deadline Thursday. In an objection to the early renewal, Disney’s New York station WABC called the FCC order “unlawful, arbitrary and unconstitutional” and said it was “legally indefensible.”
“The Commission had not demanded early renewal in over five decades,” the station wrote in its filing. “And it has never before demanded simultaneous license renewal applications from a group of stations commonly owned with a network as it has here. The order has no legitimate purpose.”
The licenses for the eight ABC-owned TV stations, including KABC in Los Angeles, were originally scheduled for renewal between 2028 and 2031.
The FCC order came shortly after ABC late-night host Jimmy Kimmel made a joke about First Lady Melania Trump looking like an “expectant widow” days before a gunman tried to breach the White House Correspondents’ Assn. gala last month that President Trump attended.
Trump has frequently threatened to have TV station licenses pulled when he is unhappy with their coverage, but the order is the first time the government has acted on his wishes, sparking anger from free speech advocates. The FCC has said the order is part of an investigation into whether Disney’s diversity and inclusion policies violate federal law and the agency’s rules against “unlawful discrimination.”
In its response, WABC said the “only plausible reason” to issue the order was to “punish the station for speech the government does not like.”
“The ultimate injury here is not to the station or its parent company. It is to the public,” WABC wrote. “When a broadcaster must weigh regulatory retaliation before making editorial decisions, the public loses access to journalism that is free from government influence.”
FCC Chairman Brendan Carr said in a statement Thursday that Disney filed its applications to renew its broadcast licenses only after the company was told its previous answers were “disingenuous, deficient and improper.”
“Contrary to Disney’s claim that the FCC called in their broadcast licenses for early renewal for no reason, the record shows something very different,” Carr said. “Broadcast licensees have a unique obligation to operate in the public interest. The FCC will follow the facts and law wherever they may lead.”
FCC Commissioner Anna M. Gomez, the panel’s only Democrat who has backed Disney in its fight, cheered the Burbank media and entertainment company’s filing, saying in a post on X that she was “glad to see them expose the FCC’s actions as nothing more than naked political retribution and an unlawful assault on free speech and a free press.”
Times staff writer Meg James contributed to this report.
Andrew here. Warning: If you bet on prediction markets about things you could know about from your work, it may be insider trading. That’s the lesson from new charges against an employee of Google.
Also, Jamie Dimon is thinking about spending $20 billion on acquisitions; we go through some possible targets. And take our quiz about the U.F.C. fight scheduled to take place at the White House.
Gaming prediction markets
In the public’s view, prediction markets are a way to bet on the N.B.A. playoffs, the Texas Senate race or what Costco executives will say on their next earnings call.
They’re also often seen as a hive of insider trading, a view reinforced by charges filed on Wednesday against a Google employee who made more than $1 million on Polymarket. The case raises more questions about how these platforms are policed — and who should do the policing.
What happened: The Google employee, Michele Spagnuolo (who used the handle AlphaRaccoon), was accused of betting on what people were searching for on Google — wagers he was sure to win because he had access to internal search data.
“Spagnuolo correctly predicted virtually all of the outcomes on these positions,” the Commodity Futures Trading Commission wrote in its complaint.
A Google representative said in a statement that using confidential information for making these kinds of bets was “a serious breach of our policies.”
Spagnuolo isn’t the only person charged with insider trading on Polymarket. Federal prosecutors in Manhattan last month accused Master Sgt. Gannon Ken Van Dyke, a U.S. Special Forces soldier, of betting on the capture of Nicolás Maduro of Venezuela, an operation he participated in.
Insider trading is an increasing problem for prediction markets. Polymarket has faced significant scrutiny because its unregulated offshore platform has long made it easy to bet anonymously. (Kalshi, which is regulated in the U.S., has also suffered from insider trading.)
Polymarket has started clamping down on that practice, according to The Information — though some longtime users have chafed at those efforts. “Polymarket will go down the drain if they make KYC mandatory,” one user wrote on the company’s Discord discussion forum, referring to “know your customer” practices.
What are policymakers doing? Critics have accused the C.F.T.C., the primary American regulator of prediction markets, of failing to adequately police the industry. (Mike Selig, the commission’s chairman, told ABC News that his agency actively patrolled for wrongdoing.)
Some lawmakers are seeking to crack down on insider trading, including Representative James Comer, the Kentucky Republican who leads the House Oversight and Government Reform Committee, and several bipartisan groups of senators.
Why it matters: Prediction markets have become big businesses. (Kalshi was most recently valued at $22 billion.) But a growing perception that they’re rife with cheating could threaten their popularity.
HERE’S WHAT’S HAPPENING
The Trump administration is reportedly preparing to fund U.S. drone companies. Shares in Unusual Machines, a drone start-up in which Donald Trump Jr. is an investor and advisory board member, are soaring in premarket trading after The Wall Street Journal, citing unnamed sources, reported on the potential investments. (The Times hasn’t independently confirmed the report.) The deals, aimed at bolstering domestic production, are still in the negotiation stage — equity stakes are a possibility — as the Pentagon vets the companies, The Journal adds.
Investors brace for Thursday’s inflation data. The Personal Consumption Expenditures report for April, which will be closely watched by the Fed, is expected to show on Thursday that headline inflation hit a three-year high of 3.9 percent. The wartime energy spike is a big culprit, and that’s likely to tie the Fed’s hands on interest rates. Lisa Cook, a Fed governor whom President Trump has tried to fire, is the latest policymaker to say that there’s even a rate increase in the cards.
Jensen Huang reportedly agrees to join the board of a Chinese university. Huang, the Nvidia C.E.O., is expected to be the latest U.S. business leader to join the advisory board of Tsinghua University School of Economics and Management, The Financial Times reports. Tim Cook, Apple’s departing C.E.O., is the chairman, and Michael Dell and Elon Musk are members. (Nvidia is trying to jump-start business in China as the Washington-Beijing trade war continues.) Laura Loomer, a right-wing agitator, quickly seized on the Huang news, calling it “a massive scandal!!!!” on social media, and a national security risk.
What might Dimon buy?
Jamie Dimon, the C.E.O. of JPMorgan Chase, is sitting on a pile of cash and says he’s open to a deal. He even put a number on it: up to $20 billion.
While that’s not a big sum relative to the bank’s assets, it got us thinking: Where could JPMorgan, whose last major acquisition was First Republic during the 2023 regional-banking crisis, go fishing for a company to buy? Brian O’Keefe asked Mike Mayo, a banking analyst at Wells Fargo.
Here are three possibilities:
Wealth management. Driven by solid margins and lucrative high-net-worth customers, this area of finance has experienced an M.&A. boom in recent years. (The First Republic deal already bolstered JPMorgan’s wealth-advisory ranks.) Such a move would tick a lot of boxes, Mayo said, adding, “It could be a high-end private bank, it could be kind of a mass-affluent brokerage firm, it could be wealth advisory.”
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Mary Erdoes, who runs JPMorgan’s wealth management division, told analysts in February that her unit had reviewed 25 potential deals last year and passed on all of them.
Payments. JPMorgan has invested heavily in new payment platforms, including in JPM Coin, a digital token it has tested with Coinbase and Mastercard. The bank handles between $5 trillion and $10 trillion in transactions daily, Mayo said. “There could be more opportunities to enhance the efficiency, the effectiveness, the timeliness or the geographic reach in the payments area,” he added.
Digital banking. Dimon recently singled out Revolut, the British banking app that is plotting expansion into the U.S., as an emerging competitive threat. “To the extent that an acquisition could help JPMorgan become the next Revolut outside the United States, that would seem to be attractive,” Mayo noted.
There are some big asterisks to consider. Because of its size, JPMorgan would most likely be barred from buying another U.S. lender on antitrust grounds. For that reason, Mayo thinks that a deal, if there is one, would probably happen abroad.
Dimon himself is being coy. The bank may have amassed ample capital for acquisitions, but “it’s not burning a hole in our pocket at all,” Dimon said on Wednesday at an investor conference. “If it sits there for a while, no problem,” he added.
Dimon did not suggest any potential targets on Wednesday.
Here are some guesses:
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Aberdeen Group, Invesco or Julius Baer in wealth management?
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Revolut is too big, but how about Wise or Toast in payments?
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Or what about Monzo or Bunq, fintech banks that have grown rapidly in Europe?
Meta will charge for its chatbot
Meta will begin charging customers for access to its A.I.-powered chatbot, a big change for a company best known for its free products — and the latest sign that even deep-pocketed companies are wrestling with the enormous cost of artificial intelligence.
On Wednesday, we looked at how companies were reining in the costs of consuming A.I., including by switching to cheaper models. Meta’s move shows that the companies supplying A.I. models are also reckoning with ballooning costs, and seeking revenue to make up for those losses.
Meta is spending a fortune on A.I. Last month the company increased its 2026 capital expenditure forecast to as high as $145 billion, and Meta’s C.E.O., Mark Zuckerberg, said it would spend at least $600 billion on A.I. infrastructure in the next few years.
Some investors have looked skeptically on that plan. The company’s stock is down 2.3 percent this year.
Meta will use paid subscriptions to offset some of its A.I. investment. The basic tier of the chatbot, Meta One Plus, will be $7.99 per month. A premium version, Meta One Premium, will cost $19.99. From Bloomberg, which reported the subscription news earlier:
Meta has long argued that its A.I. investments are already paying off in the form of highly targeted and efficient advertising, which is improved thanks to A.I. models. But the company is also looking for other ways to recoup its A.I. spending, and consumer chatbot subscriptions have become popular with several other A.I. competitors, including Alphabet Inc.’s Google and OpenAI. Both rivals offer similarly priced subscription tiers.
The company has sought to expand its subscription business, testing plans for WhatsApp, Instagram and Facebook. It has also tried to cut costs in other corners of its business. This month, Meta laid off 10 percent of its employee base, about 8,000 workers.
Investors, eager to see revenue gains from A.I., cheered Meta’s subscription-chatbot plan. The company’s stock price was up 3.7 percent at the market close on Wednesday.
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Elsewhere, shares in the software maker Snowflake are soaring in premarket trading on Thursday after it reported strong quarterly results that suggested that A.I. agents weren’t clobbering its core subscription business. Salesforce’s analyst call on Wednesday, however, renewed fears that this sector was still vulnerable to A.I. disruption.
Quiz: U.F.C. on the South Lawn
This question comes from a recent Times article. Click an answer to see if you’re right. (The link will be free.)
President Trump is getting ready to celebrate his 80th birthday — and America’s 250th — with an evening of mixed martial arts. Preparations are underway to host Ultimate Fighting Championship matches in an octagon on the White House’s South Lawn on June 14. Construction of the temporary arena, along with a 90-foot-tall arch known as “The Claw,” featuring LED lights and audio equipment, began this week.
U.F.C. plans to spend around $60 million on the event, said Mark Shapiro, the president and chief operating officer of TKO Group Holdings, U.F.C.’s parent company, on a recent earnings call. (He added that U.F.C. would lose about $30 million on the event but that it would be “an investment for the long term.”)
The expenses include about $700,000 to repair the lawn after the fight, Dana White, the U.F.C. president and chief executive, told Sports Business Journal.
How many people will the temporary arena hold for the U.F.C. event at the White House?
THE SPEED READ
Deals
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“SpaceX-Tesla Merger Is ‘Only a Matter of When,’ Early Investor Says” (Bloomberg)
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Shares in the European food-delivery company Delivery Hero are down sharply on Thursday after Uber, which is pursuing a takeover bid for the company, raised its stake to nearly 37 percent. (WSJ)
Politics, policy and regulation
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The attorneys general of New York and New Jersey subpoenaed FIFA over soaring World Cup ticket prices. (WSJ)
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Gov. Gavin Newsom of California said he would impose a 100 percent tax on payouts to state residents from the $1.8 billion fund tied to the Justice Department’s settlement with President Trump. (Politico)
Best of the rest
We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.
Waymo is rolling out a new driverless taxi to help the company expand into more cities and tackle tougher driving conditions, including snowy roads, the company announced Wednesday.
The new vehicle, dubbed the Ojai, will begin serving select customers in Los Angeles, San Francisco and Phoenix in the coming weeks. Rides will be free of charge as the company gathers feedback.
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The Ojai has sliding doors and offers riders more legroom, three screens and accessibility features such as Braille. The minivan-like taxi can carry four passengers and also has more cargo space than its current vehicles.
Waymo is launching around 100 Ojai vehicles and plans to ramp up production to supplement its fleet of Jaguar I-Pace taxis, which shuttle customers around in more than 10 cities.
The company plans to eventually have tens of thousands of driverless taxis made per year, starting with the Ojai, then scaling using retrofitted Hyundai IONIQ 5s.
The Ojai is manufactured for Waymo by Zeekr, a Chinese automobile company.
Though it appears bulkier than the I-Pace, the Ojai is only 1% larger, the company said.
Waymo’s new autonomous vehicle, called the Ojai. (Allen J. Schaben / Los Angeles Times)
The Ojai could pave the way for Waymo to expand more rapidly at a lower price, as it costs less to manufacture and outfit than the I-Pace. The company says the new robotaxis have better batteries and are easier to clean and maintain than their predecessors.
The new vehicle also uses self-driving technology more efficiently, the company said, relying on 13 cameras, five lidars and six radar sensors. The I-Pace taxis have 29 cameras.
Waymo’s sixth-generation “Waymo Driver” system will debut in the Ojai, designed to better handle snowy conditions and other driving situations.
Last week, Waymo suspended its service on U.S. freeways due to safety concerns, particularly regarding flooded roads and construction zones. The company recalled more than 3,000 vehicles in April after several vehicles drove into standing water. The sixth-generation driver aims to fix those bugs.
Waymo is a privately held company owned by Alphabet, Google’s parent company. It is leading the race to put more driverless taxis on the road, pulling ahead of Amazon’s Zoox, Elon Musk’s Tesla and a handful of efforts from Uber.
Waymo taxis have completed more than 20 million fully autonomous trips in cities including Los Angeles, Atlanta, Miami and Nashville.
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