America's wealthiest universities are venturing into Africa's fast-growing frontier markets in search of outsized investment returns that will allow them to offer scholarships, lure star professors and fund research.
For sub-Saharan Africa, recognition from these deep-pocketed US institutions, who have often earned envy among fellow global investors for their strong returns, marks a significant shift.
US university endowments, the permanent funds of educational institutions, pride themselves on spotting new investment opportunities early, such as venture capital, private equity, and natural resources such as timber. Combined, they manage assets of more than US$400 billion.
A study of 831 endowments by the Commonfund Institute and the National Association of College and University Business Officers published this year showed their annual net returns in the 10 years to June 30, 2012, averaged 6.2 per cent. In the same 10-year period, returns for the S&P 500 stock index were 5.3 per cent.
In Africa, they are seeing many of the trends that played out in emerging markets such as China, India or Brazil: strong economic growth, an emerging middle class, greater political stability, and improved government balance sheets.
These are just the attractions that US President Barack Obama highlighted on his recent trip to the continent, when he urged American and other investors to "C'mon down" to Africa.
"The growth, consumer spending, improved governance and disposable wealth, they're all positive stories," says William McLean, who manages Northwestern University's US$7 billion endowment. His team is investing in Nigeria and Kenya and recently doubled its exposure to Africa.
It is difficult to know exactly how many US university endowments have put money in Africa, because most of them prefer not to discuss their investment strategy.
Wale Adeosun, founding partner at investment firm Kuramo Capital Management, says endowments' interest in Africa began after the 2008-2009 financial crisis.
He estimates that 10 per cent to 15 per cent of these institutions are already investing in Africa. Up to 30 per cent may be seriously looking for deals there, he says.
Many endowments are required, or aim, to channel about 5 per cent of their market value to their school's budget each year, to fund scholarships, research and campus facilities.
The interest means that Africa is attracting a new class of investor - those with unlimited time horizons, in contrast to the speculative hot money that poured into the region before 2008, only to vanish when the global financial crisis hit.
"It's a lot more patient capital and ... the healthy thing about that interest is that it's likely to withstand the short term noise around the tapering of US quantitative easing," says Razia Khan, head of Africa research at Standard Chartered.