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NEW HAVEN, Conn. — Yale University is preparing to offload approximately $2.5 billion worth of private equity assets, as pressure mounts from proposed federal tax changes targeting large private university endowments.
The Ivy League institution is reportedly in advanced talks to sell a portion of its private equity portfolio at a discount of less than 10%, according to sources cited by Bloomberg. The sale would mark Yale’s first major entry into the secondary market for private equity interests.
In a statement to the Yale Daily News earlier this year, a university spokesperson confirmed the process was underway: “The university is exploring a sale of private equity fund interests and is being advised by Evercore in a process that has been in the works for many months.”
Sources familiar with the transaction say the deal is structured as a “mosaic,” allowing buyers to selectively acquire interests in certain funds rather than purchasing the portfolio wholesale.
Tax Policy Shifts Prompt Strategic Moves
Yale’s move comes as lawmakers in Washington, D.C., push for steep increases in taxes on investment returns from large private university endowments. A Republican-backed proposal—endorsed by former President Donald Trump—would impose a 21% tax on net investment income for private, non-religious institutions with large endowments.
Such a policy would significantly impact Yale and its peers, prompting institutions to reassess their investment strategies and liquidity positions.
Endowment Performance and Composition
Yale’s endowment reported a 5.7% return for the fiscal year ending June 2024, translating to a gain of $2.3 billion. Among Ivy League schools, this was the second-lowest return for the year. Despite that, the overall value of the endowment rose to $41.4 billion, buoyed by long-term performance and contributions.
Over the past decade, Yale’s endowment has returned 9.5% annually, with $14.3 billion spent on university operations and initiatives during that period.
As of last year, Yale held more than $10 billion in leveraged buyouts and another $10 billion in venture capital investments—making private equity one of the endowment’s largest asset classes.
The forthcoming asset sale may serve both to rebalance the portfolio and to create greater financial flexibility as the university braces for potential changes to the tax landscape.
