Key Takeaways
- • Indiana University Kelley School of Business students launched Sample Gates Management LLC, a $4.2 million student-managed private equity real estate fund, according to the Indianapolis Business Journal.
- • The fund raised capital from more than three dozen individual investors, including Kelley alumni, and real estate and financial firms, all of which were pitched by students at events in Indianapolis and Chicago.
- • Per Indiana University officials, the raise is the largest for an undergraduate, student-managed private equity real estate fund in the United States.
- • All capital came from investments rather than donations, and investors expect returns; the initial target is an 8% return.
- • The fund will target investments of $300,000 to $500,000, typically as minority equity positions in multi-family properties with rent growth potential, with deals vetted by an alumni and investor advisory committee.
Summary
A new private equity fund at the Indiana University Kelley School of Business is giving real estate students hands-on investment experience. The $4.2 million fund, Sample Gates Management LLC, has more than three dozen individual investors, including Kelley alumni, as well as real estate and financial firms. According to Indiana University officials, it is the largest raise for an undergraduate, student-managed private equity real estate fund in the United States.
All capital came from investments rather than donations, so contributors expect a return. The initial target is an 8% return. The students will look for opportunities of $300,000 to $500,000 each, typically as a small portion of a larger investment pool, with a focus on multi-family properties that have potential for rent growth. Prospective deals will be vetted by a committee of alumni and fund investors. Sample Gates is expected to invest across the country, and larger projects, including some properties in downtown Indianapolis, could be considered, according to Doug McCoy, the Al and Shary Oak director of real estate, who oversees the department.
McCoy said the smaller check sizes might ordinarily have kept some investors out, but alumni and other contributors joined because of the impact on students. The program gives students year-round responsibility for managing the fund, including raising capital and making investments in consultation with the advisory committee. Will Huber, a senior at IU Bloomington and student president of the program, said students must be available around the clock to handle investor questions, incoming deals and short closing timelines, and noted their fiduciary duty to protect investments.
Interest in real estate is growing across the IU system. In fall 2022, 380 students majored in the field at Bloomington, including 115 with it as their only area of study, more than 70 students in Indianapolis co-majored in real estate, and 500 students belonged to the Bloomington real estate club, up from 250 a year earlier.
The fund was established last year after a three-year process led by Patrick Engels, an IU 2021 graduate now an analyst at Evercore. Engels worked with Tom Peck, chief investment officer at The Hageman Group, and J. Timothy Morris, founder and partner of Proporium Capital Partners, to secure university administration support. Peck is faculty advisor for the real estate club and the fund.
All capital came from investments rather than donations, so contributors expect a return. The initial target is an 8% return. The students will look for opportunities of $300,000 to $500,000 each, typically as a small portion of a larger investment pool, with a focus on multi-family properties that have potential for rent growth. Prospective deals will be vetted by a committee of alumni and fund investors. Sample Gates is expected to invest across the country, and larger projects, including some properties in downtown Indianapolis, could be considered, according to Doug McCoy, the Al and Shary Oak director of real estate, who oversees the department.
McCoy said the smaller check sizes might ordinarily have kept some investors out, but alumni and other contributors joined because of the impact on students. The program gives students year-round responsibility for managing the fund, including raising capital and making investments in consultation with the advisory committee. Will Huber, a senior at IU Bloomington and student president of the program, said students must be available around the clock to handle investor questions, incoming deals and short closing timelines, and noted their fiduciary duty to protect investments.
Interest in real estate is growing across the IU system. In fall 2022, 380 students majored in the field at Bloomington, including 115 with it as their only area of study, more than 70 students in Indianapolis co-majored in real estate, and 500 students belonged to the Bloomington real estate club, up from 250 a year earlier.
The fund was established last year after a three-year process led by Patrick Engels, an IU 2021 graduate now an analyst at Evercore. Engels worked with Tom Peck, chief investment officer at The Hageman Group, and J. Timothy Morris, founder and partner of Proporium Capital Partners, to secure university administration support. Peck is faculty advisor for the real estate club and the fund.
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