$10 billion university fund

Private equity firms are quietly lining up for a chance to manage an endowment for a new Saudi university with at least $10 billion in assets.

The King Abdullah University of Science and Technology will not open until 2009 but is holding talks on the endowment with fund managers such as BlackRock and private equity firms including Bain Capital, according to the Financial Times.

The university has received $10 billion for its endowment from King Abdullah, which would make it the sixth biggest university endowment in the world. The FT says the fund could grow to as much as $25 billion, which would make it the world’s second biggest university endowment after Harvard’s $35 billion nest egg.

Money from endowments is considered particularly desirable by fund managers because universities have a long-term investment focus. Some funds such as the Kuwait Investment Authority have adopted the endowments of leading universities such as Harvard and Yale as their role models.