The group will receive $1.8 billion in startup funds from the University, and it will also seek outside equity. Due to the Select Equity team’s track record, the new company should have no trouble attracting other investors—particularly other large institutions, HMC insiders said.

Due to Securities and Exchange Commission (SEC) rules former and current HMC investors could not speak for the record.

The scenario of talented and high-paid analysts leaving HMC is becoming all too familiar to HMC President Jack E. Meyer, who has seen three other investment firms spin off since 1998.

Although HMC managed about 85 to 90 percent of its funds when Meyer arrived in 1991, through the 1990s it has continually outsourced more funds.

According to Meyer, HMC will likely outsource about half of its investments within a decade, although it’s not part of a “conscious decision.”

“As people leave, if we think they’re good, we try to continue our relationship,” said University Treasurer D. Ronald Daniel.

In 1998, when Jacobson left to found Highfields HMC gave him $500 million in capital; likewise when the Harvard Private Capital Group spun off later that year with $1.8 billion in HMC funds to start Charlesbank.