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Harvard endowment chief outlines opportunities amid grim credit conditions

Robert Kaplan offered a gathering of midmarket buyout professionals a gloomy vision for the credit markets while noting that the dislocation also provides premium investment opportunities 'if you have the dry powder'.

The dearth of affordable leverage currently hampering the buyout industry will persist for quite some time yet provide a separate opportunity set for well-positioned investors, according to Harvard Management Company acting chief executive Robert Kaplan.

“People, when they need to sell, they need to sell fast,” Kaplan said. “And we're seeing a lot of strange and unusual dislocations in the financial markets when these bouts occur. Those are opportunities to pounce…if you have the dry powder.” 

Speaking at the Association for Corporate Growth conference in Boston today, the head of the $35 billion (€22.4 billion) Harvard endowment also hailed emerging markets as a highly desirable destination for investor capital.

Although countries such as India and China would be adversely affected by a US economic slowdown in the short term, Kaplan said, in the long-term they offer better returns than domestic equities and have proven their viability in recent years.

Kaplan took over the reigns of HMC in autumn last year after Mohamed El-Erian resigned to resume working for Pacific Investment Management Company. During Kaplan's tenure, HMC has experienced several high-profile departures, including the exits of private equity manager Kevin Tunick and real estate head David Ferrero. Kaplan is slated to be replaced this July by former Wellesley endowment chief Jane Mendillo.