Regents to continue looking at divesting from Russia

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The UT System will further consider divesting funds from Russia as relations between the U.S. and the Russian governments worsen because of conflict in Ukraine, according to System officials.

At a Board of Regents meeting on Sept. 15, Regent Alex Cranberg brought up the possibility of divesting from Russia.

“It is important because Russia is threatening the USA through NATO,” Cranberg said in an email. “As President Obama has said, Putin has ripped up the ‘rule book.’ He is resurrecting the national and ethnic rivalries, which were so devastating to the 20th century.”

The University of Texas Investment Management Company, or UTIMCO, has about $200 million invested in Russia currently, according to Bruce Zimmerman, CEO and chief internal officer of UTIMCO. Zimmerman said this is a relatively small amount of money compared to the $35 billion the organization has invested in other parts of the world. 

“Divesting from Russia, in and of itself, would not necessarily be an overly significant event,” Zimmerman said at the meeting in mid-September. “The larger concern I think would be if we did begin putting in changes to the investment policies related to political and or social issues, then there could very well be a substantial domino effect.”

In an interview Thursday, Zimmerman said it is the System’s policy that UTIMCO make investments based upon economic factors and not to become involved in political situations. Zimmerman said many companies and organizations participate in divestment movements to make a political statement, such as the Rockefeller family, who is planning to divest $860 million of its charity out of fossil fuels to try and fight climate change.

“Once you decide there is one political or social issue that merits an investment decision, where does the list end?” Zimmerman said. “The context of all this is if you make economic decisions based on noneconomic reasons, there’s an economic cost.”

The regents have agreed to continue discussing the divestment issue at future board meetings.

“There comes times in the Board’s life and in the nation’s life that we may need to take a look at some of these things,” Regent Gene Powell said at the meeting in September. “I would encourage us not to foreclose in considering these items.”   

Zimmerman said if the System does decide to divest from Russia, UTIMCO would be selling $40 million of its private equity below market price.

“If we were to try to sell that position today, we might only get about $20 or $30 million for it, so there would be an immediate cost,” Zimmerman said.

Cranberg said the System should not make investment decisions based on matters of personal choice, such as opinions on alcohol or tobacco, or based purely on the domestic policies of other countries. 

“Our policies as a public investment vehicle should be based only on maximizing legal returns for our students and mission, other than factors materially affecting the security of the United States and our armed forces,” Cranberg said.