The Ivy League school’s endowment is in advanced talks on the portfolio sale, code-named “Project Gatsby,” with an overall discount expected to be less than 10%, according to people with knowledge of the discussions, who asked not to be identified because the information is private. Potential buyers had valued parts of the portfolio at a haircut of as much as 15%, some of the people said.

The transaction would mark the first time Yale has sold significant private equity holdings on the secondary market and represent a repositioning of its $41 billion endowment under Chief Investment Officer Matt Mendelsohn. It would also be one of the largest secondaries transactions in a year that’s set to a mark a record for that market.

College endowments, facing pressure from a lack of distributions from private equity funds over the past few years and the prospect of higher taxes on income from their investments, have been looking to drum up cash. Republicans in Congress proposed increasing taxes on some private school endowments to as high as 21%, from 1.4%.

Yale, which had been weighing a sale for more than a year, considered trimming positions across dozens of funds as it sought to clean up older holdings, some of the people said. The sale discussions included a so-called mosaic deal that allows buyers to cherry-pick specific investment funds they would like to acquire, some of the people said. Multiple buyers, including Lexington Partners and HarbourVest Partners, have assessed the portfolio.

A representative for Yale declined to comment, as did Lexington and HarbourVest.

Under the late David Swensen, the university pushed into alternatives to stocks and bonds — such as hedge funds, venture capital and private equity — in what came to be known as the Yale model.

The approach revolutionized endowment investing as the money pools grew their exposure to more illiquid and complex investments. US higher education endowments held an average of 56% of their assets in alternatives, according to a study for fiscal 2024 from the National Association of College and University Business Officers.