After growing the Oklahoma State University Foundation’s investment portfolio from less than $500 million to more than $900 million, its chief investment officer, Ryan Tidwell, has set his sights on outside investors.
The foundation announced this week that it has formed a not-for-profit investment management company called Multilateral Endowment Management Company (MEMCO) that will serve the OSU foundation, non-profits affiliated with the university, and charitable endowments and foundations outside the school. Tidwell will become the CEO and CIO of MEMCO, and the investment team at OSU will become employees of the new entity at launch.
The Oklahoma City-based investment management company will operate like an outsourced chief investment officer but will keep its investors’ capital in separate accounts, according to Tidwell.
“The key difference is sharing costs,” Tidwell said in a meeting at Institutional Investor’s offices on Thursday. “With each client we add, the cost of running the investment fund will decrease.”
The sharing will be done on a pro rata basis, according to the announcement.
Another difference between MEMCO and traditional OCIOs is that “we’re not going to lock clients up,” according to Tidwell. “The goal is to allow them flexibility.”
He added that the organizations MEMCO supports will have board representation at MEMCO.
“We are giving them a direct say in what we do,” Tidwell said.
According to Tidwell, the structure is comparable to a co-op, where investors are able to share resources. According to the announcement, a larger pool of assets under management will allow MEMCO to negotiate preferential fees and terms with investment managers.
Tidwell is targeting between $4 billion to $5 billion for the fund, he said. MEMCO’s first supported organizations will be the Oklahoma State University Foundation and the McKnight Center for the Performing Arts at Oklahoma State University, which collectively have $1 billion in assets under management.
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According to Tidwell, the group will seek out four to five others, with between $250 million and $1 billion in assets under management . He added that MEMCO plans to focus on investors in the “middle part of the United States.”
“We don’t view traditional OCIOs as competitors,” Tidwell said. “We’re looking for a handful of partners to work with.”