Exodus

Following the departure of equity manager Jonathon S. Jacobson, M.B.A. '87 ("Brevia," May-June, page 84), Harvard Management Company's Private Capital Group is also decamping. Michael Eisenson, head of the group, and about 30 colleagues will form a separate firm, an arrangement HMC president Jack Meyer calls "amicable and mutual."

The private-capital professionals manage about $1.5 billion of Harvard funds invested in private equity and real-estate portfolios, and will continue to do so. HMC has also committed to invest at least $550 million more with the group in coming years. In fiscal year 1997, HMC's real-estate investments returned 23.6 percent, about twice the market benchmark, and private equities 24.7 percent, more than 6 points ahead of the market.

Meyer attributes Jacobson's departure to his desire to run his own firm. In the case of the private-capital managers, he says HMC offers neither long-term contracts matching the long-term nature of the investments under management, nor compensation tied to capital gains realized. With an increasing portion of Harvard funds managed externally, rather than within HMC, Meyer notes, the issue arising is whether HMC could retain its staff by overseeing outside assets. At present, it is prohibited from doing so, he says, but it is conceivable that some hybrid organization could be created.