REG - HarbourVest Global - Half-year Report
24/10/2024 07:00
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RNS Number : 3705J HarbourVest Global Priv. Equity Ltd 24 October 2024
24 October 2024
HVPE RESULTS FOR THE SIX MONTHS ENDED 31 JULY 2024
Resilient performance
Outlook increasingly positive
HarbourVest Global Private Equity Limited ("HVPE" or the "Company"), a FTSE
250 investment company with global exposure to private companies, managed by
HarbourVest Partners, today announces its unaudited results for the six months
ended 31 July 2024.
Net asset value ("NAV") growth
· NAV per share growth of 3.0% in the half-year to a new high of $51.98
(31 January 2024: $50.47)
· Steady improvement in exit numbers, driven by M&A, with an
increase of 37% compared to the six months to 31 July 2023, and realised at an
average 29% premium to carrying value
· HVPE was a net investor over the period, with $134m cash invested.
Long term outperformance of public markets continues
· Over the 10 years to 31 July 2024, HVPE has delivered growth in NAV
per share of 239%, while the FTSE All-World Total Return (FTSE AW TR) Index
returned 144% (USD)
· Underlines the benefits of HVPE's diversification and high-quality
portfolio.
Significant distribution pool and increased balance sheet flexibility
· Distribution Pool initiated 1 February 2024, ring fencing capital to
be deployed for share buybacks or special dividends
· $45 million shares repurchased in 6 months to 31 July 2024, with HVPE
actively buying back shares on 39 of the 126 trading days in the six month
period
· From September 2022 to 18 October 2024, we bought back $120m of
shares, adding 2.7% to NAV per share - making it one of the largest share
buyback programmes in the sector
· New Revolving Credit Facility of $1.2bn secured, giving additional
working capital headroom and greater flexibility in capital allocation
decisions.
Well-positioned to benefit from upturn in private market activity
· Signs of steadily improving investor confidence, in spite of ongoing
macro and geopolitical challenges
· Investment environment increasingly supporting a more active phase in
the private markets cycle
· Exits expected to continue improving, supporting cash realisations
and HVPE's Distribution Pool, to the benefit of shareholders.
Ed Warner, Chair of HVPE, said:
"I am pleased to report steady growth in HVPE's net asset value (NAV) in the
first six months of this financial year, as well as signs of a recovery in the
Company's share price. This reflected a gradual improvement in global economic
and financial market conditions, as well as the early positive effect of the
Distribution Pool introduced by the Board at the start of the year.
"However, with short-term UK political uncertainty weighing on investor
sentiment, gains in our shares during the first six months of the financial
year were subsequently eroded. We view the future for HVPE with confidence and
believe that the current share price in no way reflects the performance by the
Company over many years and the opportunities in private markets that we
foresee ahead."
Semi-Annual Report and Accounts
To view the Company's Semi-Annual Report and Accounts please visit HVPE's
results centre: https://www.hvpe.com/shareholders/results-centre/
(https://www.hvpe.com/shareholders/results-centre/) . Page number references
in this announcement refer to pages in this report. The Semi-Annual Report and
Accounts will also shortly be available on the National Storage Mechanism,
which is situated at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Semi-Annual Results Presentation
HVPE will publish a new presentation on its website to supplement the
publication of the Semi-Annual Results for the six months ended 31 July 2024.
The presentation will be available to view and download from
http://www.hvpe.com (http://www.hvpe.com) by the close of business today.
- ENDS -
LEI: 213800NBWV6WWV8TOL46
Enquiries:
Shareholders
Richard Hickman Tel: +44 (0)20 7399 9847 rhickman@harbourvest.com (mailto:rhickman@harbourvest.com)
Stephanie Hocking Tel: +44 (0)20 7399 9834 shocking@harbourvest.com (mailto:shocking@harbourvest.com)
MHP
Tim Rowntree / Tel: +44 7890 952 661 HVPE@mhpgroup.com (mailto:HVPE@mhpgroup.com)
Robert Collett-Creedy Tel: +44 7736 464 749
Media
HarbourVest Partners media@harbourvest.com (mailto:media@harbourvest.com)
Notes to Editors:
About HarbourVest Global Private Equity Limited:
HarbourVest Global Private Equity Limited ("HVPE" or the "Company") is a
Guernsey-incorporated, closed-end investment company which is listed on the
Main Market of the London Stock Exchange and is a constituent of the FTSE 250
index. HVPE is designed to offer shareholders long-term capital appreciation
by investing in a private equity portfolio diversified by geography, stage of
investment, vintage year, and industry. The Company invests in and alongside
HarbourVest-managed funds which focus on primary fund commitments, secondary
investments and direct co-investments in operating companies. HVPE's
investment manager is HarbourVest Advisers L.P., an affiliate of HarbourVest
Partners, LLC, an independent, global private markets asset manager with over
42 years of experience.
About HarbourVest Partners, LLC:
HarbourVest is an independent, global private markets firm with over 42 years
of experience and more than $127 billion of assets under management as of
March 31, 2024. Our interwoven platform provides clients access to global
primary funds, secondary transactions, direct co-investments, real assets and
infrastructure, and private credit. Our strengths extend across strategies,
enabled by our team of more than 1,200 employees, including more than 230
investment professionals across Asia, Europe, and the Americas. Across our
private markets platform, our team has committed more than $59 billion to
newly-formed funds, completed over $55 billion in secondary purchases, and
invested over $40 billion in direct operating companies. We partner
strategically and plan our offerings innovatively to provide our clients with
access, insight, and global opportunities.
This announcement is for information purposes only and does not constitute or
form part of any offer to issue or sell, or the solicitation of an offer to
acquire, purchase or subscribe for, any securities in any jurisdiction and
should not be relied upon in connection with any decision to subscribe for or
acquire any Shares. In particular, this announcement does not constitute or
form part of any offer to issue or sell, or the solicitation of an offer to
acquire, purchase or subscribe for, any securities in the United States or to
US Persons (as defined in Regulation S under the US Securities Act of 1933, as
amended ("US Persons")). Neither this announcement nor any copy of it may be
taken, released, published or distributed, directly or indirectly to US
Persons or in or into the United States (including its territories and
possessions), Canada, Australia or Japan, or any jurisdiction where such
action would be unlawful. Accordingly, recipients represent that they are able
to receive this announcement without contravention of any applicable legal or
regulatory restrictions in the jurisdiction in which they reside or conduct
business. No recipient may distribute, or make available, this announcement
(directly or indirectly) to any other person. Recipients of this announcement
should inform themselves about and observe any applicable legal requirements
in their jurisdictions.
The Shares have not been and will not be registered under the US Securities
Act of 1933, as amended (the "Securities Act") or with any securities
regulatory authority of any state or other jurisdiction of the United States
and, accordingly, may not be offered, sold, resold, transferred, delivered or
distributed, directly or indirectly, within the United States or to US
Persons. In addition, the Company is not registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act") and
shareholders of the Company will not have the protections of that act. There
will be no public offer of the Shares in the United States or to US Persons.
This announcement has been prepared by the Company and its investment manager,
HarbourVest Advisers L.P. (the "Investment Manager"). No liability whatsoever
(whether in negligence or otherwise) arising directly or indirectly from the
use of this announcement is accepted and no representation, warranty or
undertaking, express or implied, is or will be made by the Company, the
Investment Manager or any of their respective directors, officers, employees,
advisers, representatives or other agents ("Agents") for any information or
any of the opinions contained herein or for any errors, omissions or
misstatements. None of the Investment Manager nor any of their respective
Agents makes or has been authorised to make any representation or warranties
(express or implied) in relation to the Company or as to the truth, accuracy
or completeness of this announcement, or any other written or oral statement
provided. In particular, no representation or warranty is given as to the
achievement or reasonableness of, and no reliance should be placed on any
projections, targets, estimates or forecasts contained in this announcement
and nothing in this announcement is or should be relied on as a promise or
representation as to the future.
Other than as required by applicable laws, the Company gives no undertaking to
update this announcement or any additional information, or to correct any
inaccuracies in it which may become apparent and the distribution of this
announcement. The information contained in this announcement is given at the
date of its publication and is subject to updating, revision and amendment.
The contents of this announcement have not been approved by any competent
regulatory or supervisory authority.
This announcement includes statements that are, or may be deemed to be,
"forward looking statements". These forward looking statements can be
identified by the use of forward looking terminology, including the terms
"believes", "projects", "estimates", "anticipates", "expects", "intends",
"plans", "goal", "target", "aim", "may", "will", "would", "could", "should" or
"continue" or, in each case, their negative or other variations or comparable
terminology. These forward looking statements include all matters that are not
historical facts and include statements regarding the intentions, beliefs or
current expectations of the Company. By their nature, forward looking
statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward looking statements
are not guarantees of future performance. More detailed information on the
potential factors which could affect the financial results of the Company is
contained in the Company's public filings and reports.
All investments are subject to risk. Past performance is no guarantee of
future returns. Prospective investors are advised to seek expert legal,
financial, tax and other professional advice before making any investment
decision. The value of investments may fluctuate. Results achieved in the past
are no guarantee of future results.
This announcement is issued by the Company, whose registered address is BNP
Paribas House, St Julian's Avenue, St Peter Port, Guernsey, GY1 1WA
© 2024 HarbourVest Global Private Equity Limited. All rights reserved.
Chair's statement
I am pleased to report steady growth in HVPE's net asset value (NAV) in the
first six months of this financial year(1), as well as signs of a continued
recovery in the Company's share price. These reflect a gradual improvement in
global economic and financial market conditions, as well as the early positive
effect of the Distribution Pool introduced by the Board at the start of the
year.
Gains in our share price during the first six months of the year were,
however, subsequently eroded after the period end, resulting in a widening of
the discount to NAV at which HVPE's shares trade. We believe there are a
number of reasons for this, most notably a result of nervousness in the UK
market ahead of the new government's Autumn budget and potential changes to
the tax regime.
We believe this share price discount does not reflect the high quality of
HVPE's portfolio and a brightening macro backdrop. We have seen recent
liquidity events that demonstrate the desirability of the assets in HVPE's
portfolio and which suggest that the current discount level is unjustified.
Accordingly, we will continue to market vigorously the merits of the Company
to investors and use the Distribution Pool to buy back HVPE's shares, as we
have been doing consistently and in large volumes in recent months.
Financial performance
HVPE's NAV per share increased by 3.0% in the half year to $51.98, a level
3.7% higher than twelve months previously and a new high. Our share price rose
to £26.10 over the same period, a 12.7% increase in the half year. The net
effect of these movements was a narrowing of the shares' discount to NAV from
42% to 34%(1) in the six months under review. As previously mentioned, the
share price deteriorated after the period end, closing at £23.20 on 18
October 2024.
For reference, the FTSE All World Index delivered a total return of +12.6% in
the half year and +17.6% over the twelve months to 31 July 2024. However, over
the long term, HVPE has consistently outperformed global stock markets, with
HVPE's NAV per share delivering an annualised total return of +13.0% in dollar
terms and a relative annualised outperformance of +3.6% of the FTSE All World
Index over the 10 years to 31 July 2024. Over the past decade, HVPE has grown
its NAV per share by 239% and its shares have risen by 268% in sterling terms.
By contrast, the FTSE All World Index has provided a total return of 144%.
Public markets tend to be more volatile than private markets especially during
periods of uncertainty, and therefore we believe short-term comparisons are
less meaningful. Longer-term evaluations through the cycle are more reflective
of HVPE's performance and strategy.
(1 The discount is calculated based on the NAV per
share available to the market at the period end, that being the 30 June 2024
estimate converted to sterling at the prevailing GBP/USD foreign exchange
("FX") rate, compared with the share prices on 31 July 2024. Please refer to
the Alternative Performance Measures ("APMs") on pages 62 to 65 for
calculations.)
Significant Distribution Pool benefitting shareholders
At the start of this financial year, the Board and Investment Manager
introduced a new capital allocation policy. Its centrepiece is a Distribution
Pool that is seeded in its first year with $75 million that would otherwise
have been committed to a new HarbourVest investment vehicle. This is added to
each month with sums equal to 15% of the cash received from HVPE's underlying
investment portfolio, with the Pool accumulating up to a maximum balance set
by the Board. The Pool is then available to be used to return capital to
investors through share buybacks or dividends.
We believe that this new policy and Distribution Pool are transparent and
straightforward to administer. This is an 'evergreen' policy in which the Pool
grows whenever HVPE receives cash from an investment, with no costs or charges
deducted. As a result, funds will be available for distribution to
shareholders through share buybacks or dividends throughout the economic and
investment cycles. The new policy is designed to benefit shareholders by
increasing the liquidity of the Company's shares, supporting its share price,
and potentially reducing the discount to NAV at which it trades.
Each month, we announce the latest balance of the Distribution Pool as well as
its inflows and uses. At 31 July 2024, the Pool stood at $37m, having received
$50m of the $75m of seed funding as well as contributions from portfolio
distributions. We were active buying back shares on 39 of the 126 trading days
in the six months, with a total of $45m purchased. The net effect was a $0.40,
or 0.8%, accretion to NAV per share.
Since the end of the half year(2), the Pool has received the final $25m of
seed funding and we have bought back a total of $19m of HVPE shares, being
active on 44 of the 56 trading days in the period. Since we commenced share
buybacks in September 2022, we have now bought back $120m of shares, adding
2.7% to NAV per share. While HVPE's shares continue to trade at a wide
discount to NAV our priority in deploying the Distribution Pool will remain to
buy back shares, which reflects our belief in the quality and value of the
Company's underlying investments, and which will deliver NAV per share
enhancement.
(2 For the period from 1 August 2024 until 18
October 2024)
( )
Balance sheet and portfolio cash flows
HVPE was a net investor during the six months under review, to the tune of
$134m which, along with buyback activity, drove a $206 million increase in the
Company's net debt level to $340 million. Despite the negative cashflow in the
period, the Company continues to have access to ample liquid financial
resources, with $140 million of cash and $720 million available to draw on the
facility as at 31 July 2024. Calls on our cash from underlying funds totalled
$270m against distributions received of $136m. In the comparable period last
year, the Company's net investment was slightly larger at $157m. Key to a
pick-up in distributions, and a reversal in overall cash flows, will be a
recovery in both the IPO and M&A markets. As the Investment Manager makes
clear in its review later in this report, there are early signs of a potential
recovery and hence it is hopeful of stronger distributions through the
remainder of this financial year and into next.
Mindful of the dampened levels of corporate activity across the globe, we
chose to make no new commitments to HarbourVest funds during the half year,
continuing the restraint we have exercised over the past couple of years.
However, such decisions are finely nuanced as we must ensure that HVPE always
has an appropriate spread of fund vintages so as not to miss out on attractive
opportunities at low points in the investment cycle. To that end, in recent
weeks we have committed $195m to HIPEP X, a HarbourVest international
multi-strategy fund of funds. The fund will pursue a proven investment
strategy and HVPE has invested successfully in a number of its predecessors.
As HVPE's net assets grow, it is important that its ability to borrow
increases commensurately. This enables the Investment Manager to ensure that
it can manage liquidity through the investment cycle and to avoid any drag on
returns from having to hold significant portions of cash as an insurance
policy for difficult times. To that end, we were pleased to secure an
increased credit facility totalling $1.2bn during the half year, up from the
previous $800m. The syndicate providing this facility included two new
members, Ares Management Credit Funds and Apollo-managed funds, who join two
existing lenders, and who both specialise in private credit markets, thus
providing shareholders with additional reassurance as to the valuation of
HVPE's portfolio.
Marketing and shareholder engagement
The merits of investing in HVPE's shares are clear to me and my fellow
Directors, and we feel the long-term performance of the Company speaks for
itself. That being said the Board and Investment Manager understand the
imperative of promoting the Company, and as such have been very active in
meeting existing and potential investors. All shareholders were invited to our
annual Capital Markets Day in June and we were delighted to see so many of you
there. I have met a number of investors and am always available to do so. The
Board have, in addition, also committed to increase HVPE's annual marketing
expenditure by 70%. All with the ambition of explaining the merits of
investment in private markets generally, and HVPE in particular.
Company prospects and outlook
Although the much-anticipated recovery in investment confidence around the
world is proving protracted, there are positive signs that investors are
overcoming the uncertainties resulting from war, political turmoil and
economic dislocations. HVPE's portfolio investments have proven remarkably
resilient over the past few challenging years, which speaks to their quality.
As described in the Investment Manager's report, liquidity events occurring
shortly after the period end have added to the Distribution Pool, which stood
at $56m as at 18 October 2024. These also provide additional evidence of the
desirability of the underlying assets in the portfolio.
We view the future for HVPE with confidence and believe that the share price
in no way reflects the performance by the Company over many years and the
opportunities that we believe lie ahead. We are grateful to all shareholders
who continue to share that confidence. You can rest assured that your
interests will always be front and centre of our thinking.
Ed Warner
Chair
23 October 2024
Investment Manager's Review
Introduction
In this section, Richard Hickman, Managing Director, HVPE, who is responsible
for the day-to-day management of the Company, reflects on the first six months
of the financial year and shares his outlook. Richard joined HarbourVest in
2014 and has a total of 18 years' experience in the listed private equity
sector.
Market developments in H1 2024
The improvement in the global macroeconomic climate which began in late 2023
continued during the first half of 2024, as inflation pressures eased, the US
and other economies expanded, albeit modestly, and interest rates began to
fall in key markets. This relatively favourable environment, combined with
mounting excitement about artificial intelligence (AI), spurred strong gains
in global equity markets, to the extent that the Nasdaq, the S&P 500, and
other market indices are trading around all-time highs.
As is typically the case in market upswings, private equity valuations have
lagged the H1 2024 gains in public markets, although there are some early
signs of recovery. Trade buyers are returning, and IPO and M&A activity is
rising. For example, in Q1-Q3 2024, the Americas and EMEIA(1) regions recorded
double digit year-over-year growth in IPO activity(2), as GPs took advantage
of improved public market sentiment. Increasing confidence in private markets
is also reflected in the fact that mainstream asset managers are investing in
publicly listed private equity managers such as KKR and Carlyle, whose shares
have made strong gains since late 2023. Despite this, listed private equity
funds have lagged the strong gains of both public equity markets and listed
private equity managers, even though the trading performance within portfolios
has generally been strong.
(1 EMEIA refers to Europe, the Middle East, India
and Africa)
(2 Source: EY US IPO Trends 2024 - Q3 report)
How did HVPE fare in this environment?
HVPE recorded a modest 3.0% growth in NAV per share over the six months ended
31 July 2024, while the FTSE All World Total Return index gained 12.6%. We
appreciate that HVPE's recent NAV per share growth is below the long-run
average, and below the returns posted by the majority of listed equity
indices. However, we believe that this is a function of the short-term
performance lag between public and private markets, rather than being an
indication of the true long-term growth prospects of the portfolio.
Growth in NAV per share was driven by a 2.6% underlying valuation gain in the
portfolio which was broadly spread across stage and strategy, with particular
strength in the Buyout, Direct and European segments. Muted returns in the
venture portion of the portfolio continued to drag down aggregate performance,
following similar weakness in the last financial year.
For the six-month reporting period, capital calls for investments into
HarbourVest funds exceeded distributions, resulting in the net portfolio cash
flow figure being negative $134 million. This reflects a continued weak exit
environment for underlying GPs who would rather hold on to their assets and
continue to drive value growth than accept potentially sub-par offers on their
assets in the near term. By the same rationale, it also reflects a strong
investment environment as new deals can be done at more attractive valuations.
No new commitments were made during the period. We considered this to be the
prudent approach considering the continued period of depressed realisation
activity and resultant impact on the Company's balance sheet.
However, there are signs of realisations improving, and during the period
there were 209 known M&A and IPO transactions in the portfolio which was a
37% increase compared to the six months to 31 July 2023.
How is H2 2024 shaping up?
Uncertainties remain relating to the forthcoming US presidential election, and
geopolitical tensions will persist, but private markets participants tend to
be entrepreneurial and innovative, so we are cautiously optimistic about the
outlook for H2 2024 and beyond. As the global macroeconomic environment begins
to improve, with inflation concerns subsiding and interest rates beginning to
fall in most major economies, conditions become increasingly favourable for a
more active phase of the private markets cycle.
The pick-up in IPO and M&A activity in the first half of 2024 is an
indication that market sentiment is improving, and the success of recent
private equity and venture capital-backed IPOs such as Galderma, Renk, and
Reddit, may encourage further public offerings. Elsewhere in the private
markets, growth in infrastructure investment is accelerating, spurred in part
by the adoption of power-hungry AI tools, which is driving demand for
electricity generation, data storage centres and supporting infrastructure.
These favourable prospects for private markets in general could suggest that
there is scope for a re-rating of listed private equity funds, as this area of
the market catches up with the broader sector and public markets (see chart
below(3) ).
HVPE is well-positioned to benefit from any upturn in private market activity,
and has a strong long term track record of meeting its objective to materially
outpace public market returns throughout the cycle. The positive outlook for
the portfolio is supported by recent liquidity events occurring shortly after
the period end. The most notable events are the sale of CrownRock L.P., the
2nd largest underlying asset as at 31 July 2024, and the signing of a
secondary sale of predominantly tail-end positions from a number of
HarbourVest funds in the portfolio. Meanwhile, the Company's wide discount
suggests its shares currently offer long term investors latent value and
continue to represent a great opportunity to access a diverse array of
companies not listed on public markets.
(3 Source: Refinitiv Workspace for the period May
2023 to August 2024)
Richard Hickman
Managing Director
Investment Manager's Report
NAV per share and portfolio performance - Six Months to 31 July 2024
The 3.0% increase in the Company's NAV per share during the six-month review
period was primarily driven by a 2.6% increase in the underlying value of the
portfolio. In percentage terms, the Direct portfolio was the best performing
strategy, delivering value growth of 5.3% over the six months. Geographically,
continuing a trend seen in the last financial year, Europe was the strongest
performing region, delivering a +4.0% return. In terms of stage, the combined
performance of Private Credit, Infrastructure & Real Assets was the
strongest, growing 4.7% over the six months ended 31 July 2024. Venture and
Growth Equity was the weakest performing segment, growing 1.1% over the
period. More information on the drivers can be found on page 13.
HVPE remains well diversified by sector, strategy and stage, as demonstrated
by the analysis on page 11. We believe that diversification in general is
essential to achieving consistently strong returns from a private markets
portfolio. Investing across a range of private market sub-asset-classes is
beneficial as returns can vary substantially by vintage and at different
points in the economic cycle.
Additionally, HVPE's portfolio is highly diversified by company. As at 31 July
2024, no single company represented more than 2.2% of the Investment Portfolio
value (31 January 2024: 2.1%), helping to mitigate company-specific risk. The
top 100 companies in the portfolio represented 28% of total value (31 January
2024: 28%), while the top 1,000 companies represented 79% (31 January 2024:
81%).
As at 31 July 2024, HVPE held investments in 63 HarbourVest funds and 16
Secondary Co-Investments(4) (unchanged from 31 January 2024). Of these, the
largest fund contributors to NAV per share movement in absolute terms during
the six months to 31 July 2024 are described below:
· Co-Investment V, a global Direct Co-investment fund, was the largest
contributor over the reporting period, adding $0.20 to NAV per share. With a
vintage year of 2018, this fund is in its growth phase. The increase came
predominantly from realised gains.
· Fund XI Buyout, a US-focused Buyout fund of funds, was the second
largest contributor over the reporting period, increasing NAV per share by
$0.17. With a vintage year of 2018, this fund is in its growth phase. The
increase came predominantly from unrealised gains.
· Asia Pacific V, an Asia Pacific-focused multi-strategy fund of funds,
was the third largest contributor over the reporting period, adding $0.15 to
NAV per share. With a vintage year of 2021, this fund is in its investment
phase. The increase came predominantly from unrealised gains.
· Co-Investment VI, a global Direct Co-Investment fund, was next,
increasing NAV per share by $0.12. With a vintage year of 2021, this fund is
in its investment phase. The increase came predominantly from unrealised
gains.
· Fund XII Buyout, a US-focused Buyout fund of funds, was next,
increasing NAV per share by $0.10. With a vintage year of 2021, this fund is
in its investment phase. The increase came predominantly from unrealised
gains.
All the remaining HarbourVest funds in the portfolio combined contributed to
an aggregate $0.86 increase to HVPE's NAV per share over the six-month period.
(4 These include four Secondary Overflow III
investments, 11 Secondary Overflow IV investments, and Conversus, referred to
as "HVPE Charlotte Co-Investment L.P." in the Unaudited Condensed Interim
Consolidated Schedule of Investments.)
Fund Movement(5)
NAV per Share at 31 January 2024 $50.47
Co-Investment V +$0.20
Fund XI Buyout +$0.17
Asia Pacific V +$0.15
Co-Investment VI +$0.12
Fund XII Buyout +$0.10
Other HarbourVest Funds(6) +$0.86
Management Fees(7) -$0.15
Performance Fees(8) -$0.08
Net Operating Expenses(9) -$0.26
Foreign Currency +$0.00
Share Buybacks +$0.40
NAV per Share at 31 July 2024 $51.98
(5 Realised and unrealised gains are shown net of
management fees, performance fees, and foreign currency in the Unaudited
Condensed Interim Consolidated Statements of Operations.)
(6 Realised gain/value changes from the balance of
58 other HarbourVest funds and 16 secondary co-investments in the Investment
Portfolio.)
(7 Management fees include management fees from
HarbourVest Funds and Secondary Co-investments as shown in the Unaudited
Condensed Interim Consolidated Statements of Operations ($56k).)
(8 Please refer to page 20 for more information on
the performance fees.)
(9 Operating expenses exclude management fees ($56k)
and are shown net of interest and other income ($2,755k).)
Portfolio Cash Flows
For the six-month reporting period, capital calls for investments into
HarbourVest funds ($270 million) exceeded distributions ($136 million),
resulting in the net portfolio cash flow figure being negative $134 million.
The impact of the negative portfolio cash flow on the balance sheet and the
resultant use of the credit facility is provided on page 18.
Distributions were driven in large part by activity in March 2024, during
which cash proceeds of $51 million were received, mainly from the Primary
funds. This contributed over a third of the total distributions over the
period. Monthly distributions in the rest of the period ranged from $6 million
to $37 million.
The largest HarbourVest fund capital calls and distributions over the
reporting period are set out in the tables below. The top ten fund calls in
aggregate accounted for $234 million (87%) of the total and came from a broad
mix of HarbourVest funds. The majority of total calls by value (83%) were into
primary opportunities. The top ten HarbourVest fund distributions totalled $79
million, or 58% of the total proceeds received in the period. Distributions by
value were split mainly between primary investments (66%) and direct
co-investments (26%), with the remainder coming from secondary investments
(8%).
Top Five HarbourVest Fund Calls
HarbourVest Fund Name Vintage Year Description Called amount
Asia Pacific V 2021 Asia Pacific-focused multi-strategy fund of funds $65m
Fund XII Buyout 2021 US-focused Buyout fund of funds $37m
HIPEP IX 2020 International multi-strategy fund of funds $29m
Fund XI Buyout 2018 US-focused Buyout fund of funds $28m
Co-Investment VI 2021 Global Direct Co-investment fund $19m
Top Five HarbourVest Fund Distributions
HarbourVest Fund Name Vintage Year Description Distributed amount
Co-Investment V 2018 Global Direct Co-investment fund $15m
HIPEP VII Partnership Fund 2014 International multi-strategy fund of funds $9m
Global Annual Fund 2014 Global multi-strategy fund of funds $9m
Fund IX Buyout 2011 US-focused Buyout fund of funds $8m
Mezzanine Income Fund 2015 US-focused Private Credit Direct Co-investment fund $7m
M&A Transactions and IPOs
During the six months ended 31 July 2024, there were a total of 209 known
M&A transactions and IPOs. This is a 37% increase compared to the six
months to 31 July 2023 (153 M&A transactions).
Approximately 90% (188) of these transactions were M&A (trade sales or
sponsor-to-sponsor) transactions, with the remaining 10% (21) being IPOs. It
is important to note that IPOs tend to represent a relatively small proportion
of exits for HVPE even in normal circumstances, consistent with wider industry
trends.
Of HVPE's total 209 known M&A transactions and IPOs, 52% (109) related to
buyout-backed companies and 48% (100) to venture-backed companies.
Over the six-month period, the weighted average uplift to pre-transaction
carrying value for a large sample of transactions was 29%(10).
The top five M&A transactions and IPOs during the period (by contribution
to HVPE NAV per share) are listed below.
(10 These figures represent the weighted average
percentage uplift to carrying value of 56 individual company M&A and IPO
transactions during the six months ended 31 July 2024. This analysis takes
each company's value (whether realised or unrealised) at 31 July 2024 and
compares it to the carrying value prior to announcement of the transaction.
This analysis represents 86% of the total value of transactions in the six
months ended 31 July 2024 and does not represent the portfolio as a whole.
Additionally, it does not reflect management fees, carried interest, and other
expenses of the HarbourVest funds or the underlying managers, which will
reduce returns. Past performance is not necessarily indicative of future
returns.)
Top Five M&A transactions Top IPOs
(by contribution to HVPE NAV per share(11)) (by contribution to HVPE NAV per share)
Company Stage Industry Contribution
Company Stage Industry Contribution
SRS Distribution Inc. Buyout Industrials +$0.09 Rubrik, Inc. Venture Information Technology +$0.01
Olink Proteomics Holding AB Buyout Health Care +$0.07 Galderma Buyout Health Care +$0.01
GRESB Venture Information Technology +$0.03
Undisclosed Buyout Health Care +$0.03
Grupo CRM Buyout Consumer Staples +$0.02
No other IPO contributed more than +$0.01 to NAV per share
Top IPOs
(by contribution to HVPE NAV per share)
Company Stage Industry Contribution
Rubrik, Inc. Venture Information Technology +$0.01
Galderma Buyout Health Care +$0.01
No other IPO contributed more than +$0.01 to NAV per share
(11 As measured since the announcement of the
transaction or IPO filing.)
( )
Company Activity
New Fund Commitments
No new fund commitments were made in the six months ended 31 July 2024 (six
months to 31 July 2023: $150 million commitments made). Total unfunded
commitments were $2.2 billion as at 31 July 2024, representing a net decrease
of $270 million from 31 January 2024 ($2.5 billion).
HVPE's Approach to ESG and DEI
Through its investments in HarbourVest funds, HVPE helps to support innovation
and growth in the global economy. HVPE delegates the responsibility for ESG at
the investment level to HarbourVest, but oversees this activity through
regular engagement with the Investment Manager to stay fully abreast of its
activities.
During the half year period, HVPE offset its operational carbon emissions
resulting primarily from purchased electricity, waste, and business travel,
simultaneously with HarbourVest's carbon reduction and offsetting programme.
The programme compensates for emissions by delivering finance to emission
reduction projects, which are independently verified by ClimeCo to assure
emissions reductions are occurring. To offset its emissions, HVPE supported
the New Bedford Landfill Methane Project operating local to HarbourVest's
headquarters in Massachusetts, a landfill gas-to-energy plant which produces
approximately 3.3 megawatt hours of clean electricity while reducing the
amount of methane released into the atmosphere. This project recently received
ICVCM(12) Core Carbon Principles certification.
HarbourVest continues to progress its ESG strategy and expects to publish an
updated ESG report later in 2024. HVPE will report more detail on the
developments in next year's Annual Report and Accounts which will be published
in May 2025.
HarbourVest produces an annual Diversity and Inclusion Report, the latest
version is available at https://www.harbourvest.com
(https://protect.checkpoint.com/v2/___https:/www.harbourvest.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzo5Y2NjMTY3ZGY5ZjM1YmJlZDQ0MjNjMzkxZmI5NmIwMDo2OmVkZWU6MmEzYTJlMmU4MzczMmU1NzhhYjBmMDIzMDM1MTdjMDEzOTQwY2M1NzhkNDgyMzg1MThkMzljNmE1NjA0MzUxOTpwOlQ6Tg)
.
(12 The Integrity Council for the Voluntary Carbon
Market ("ICVCM") is a non-profit, independent governance body that aims to set
and maintain a global standard for high integrity in the voluntary carbon
market, unlocking private climate and carbon finance that would not otherwise
be deployed.)
Diversification at 31 July 2024(13)
Geography
North America 62%
Europe 22%
Asia 14%
Rest of World 2%
Stage
Buyout 61%
Venture & Growth Equity 30%
Private Credit, Infrastructure & Real Assets 9%
Strategy
Primary 49%
Secondary 31%
Direct Co-investment 20%
Phase
Investment 46%
Growth 45%
Mature 9%
Industry
Tech & Software 33%
Consumer 14%
Medical & Biotech 13%
Financial 12%
Industrial & Transport 10%
Business Services & Other 10%
Energy & Cleantech 4%
Media & Telecom 4%
Currency
US dollar 81%
Euro 14%
Sterling 3%
Australian dollar 1%
Other 1%
( )
(13 Diversification by stage, phase, strategy, currency,
and geography is based on the estimated NAV of partnership investments within
HVPE's fund of funds and company investments within HVPE's Co-investment
funds. Industry diversification is based on the reported value of the
underlying company investments for both fund of funds and Co-investment
funds.)
Recent events
HVPE Estimated NAV as at 30 September 2024
HVPE releases an estimated NAV on a monthly basis. These reports are available
on the Company's website, generally within 20 calendar days of the month-end.
On 23 October 2024, HVPE published an estimated NAV per share as at 30
September 2024 of $52.48 (£39.25), an increase of $0.50 (1.0%) from the final
31 July 2024 NAV (US Generally Accepted Accounting Principles ("GAAP")) figure
of $51.98. This was mainly driven by valuation gains, favourable foreign
exchange movements and share buybacks. This latest NAV per share is based on a
valuation breakdown of: 10% as at 30 September 2024 (reflecting 5% public
company holdings and 5% Direct Co-investments), 85% actual 30 June 2024 and 5%
actual 31 March 2024. Consistent with previous estimated NAV reports,
valuations are also adjusted for foreign exchange movements, cash flows, and
any known material events to 30 September 2024.
The Investment Pipeline of unfunded commitments increased from $2.2 billion at
31 July 2024 to $2.4 billion at 30 September 2024, based on the new
commitments, capital funded, and taking foreign exchange movements into
account.
HVPE's cash and equivalents increased by $6 million from $140 million at 31
July 2024 to $146 million at 30 September 2024. As outlined in the August 2024
and September 2024 factsheets, this is a result of HVPE being a net cash
recipient by $35 million across the two months, as well as the $13 million of
share buybacks conducted, with the remainder of the cash movement being due to
operating expenses charged during the two months. A recent sale of
predominately tail-end positions made by the Investment Manager will
contribute further cash realisations to HVPE in the-near term, boosting
liquidity and the distribution pool to the benefit of shareholders.
HVPE's look-through exposure to borrowing at the HarbourVest fund level had
increased by $16 million, from $484 million at 31 July 2024 to $500 million at
30 September 2024. The latest balance sheet ratios can be found in the
factsheet on the HVPE website: www.hvpe.com
(https://protect.checkpoint.com/v2/___http:/www.hvpe.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzo5Y2NjMTY3ZGY5ZjM1YmJlZDQ0MjNjMzkxZmI5NmIwMDo2OjRjOGM6NGI1NGM2Y2Q0MmQxOTAwNjhmMGRmM2IzZTE0OGYzM2ZlMzgwNTQ0OTAzM2I0OWJmMTAyMjRjNDdmOWZlZjAwYjpwOlQ6Tg)
.
Share Buybacks
HVPE has continued to buy back shares post period-end:
· In the period from 1 August 2024 to 18 October 2024, HVPE repurchased
592,826 shares for cancellation at an average price of £23.98 per share for a
total consideration of £14.2 million ($18.5 million). This added $0.17 to NAV
per share.
· Inclusive of the post period-end buybacks, this means that in total,
since the introduction of the new distribution policy on 1 February 2024, HVPE
has repurchased 2,045,624 shares for cancellation at an average price of
£24.09 per share for a total consideration of £49.3 million ($63.1 million).
In total, this exercise added $0.56 to NAV per share.
· As at 18 October 2024 the Distribution Pool balance was $55.5m and
the total number of shares in issue was 75,637,884.
Share Price since 31 July 2024
HVPE's share price closed at £23.20 on 18 October 2024, which represents a
11% decrease compared with the £26.10 share price recorded on 31 July 2024.
KPIs and investment objective
The Company's investment objective is to generate superior shareholder returns
through long-term capital appreciation by investing primarily in a diversified
portfolio of private markets investments.
Key Performance Indicators ("KPIs")(1)
Total Shareholder Return (six months, 12 months, and 10 years)
The key measure of HVPE's performance is the total return experienced by its
shareholders. While NAV per share is the major driver over the long-term, the
level of any premium or discount to NAV at which HVPE's shares trade is also
relevant.
A significant majority of HVPE's shareholders are UK based, and most of the
trading volume is in sterling.
(1 Please note some of these KPIs are also APMs. Please see pages 62
to 65 for our APMs.)
NAV per Share Return (six months, 12 months, and 10 years)
HVPE seeks to achieve growth in NAV per share materially ahead of public
markets over the long term, as defined by the FTSE All World Total Return
("FTSE AW TR") Index in US dollars. The FTSE AW TR is a global equity index
with geographical weightings comparable to HVPE's portfolio. Please refer to
the Alternative Performance Measures on pages 62 to 65 for details of
performance calculations.
Balance Sheet Strength
The Board and the Investment Manager actively monitor HVPE's balance sheet by
means of a set of key ratios, with a view to maintaining a robust financial
position under all plausible forecast scenarios. Please see Managing the
Balance Sheet on pages 18 to 19 for more details on the ratios and page 8 of
the Investment Manager's report for more detail on the net portfolio cash
flow.
Liquidity in the Shares (Daily Trading Volume)
Current and prospective shareholders place a high value on liquidity as it
provides reassurance that there is a ready market in the shares should they
wish to manage their position. The Board and the Investment Manager monitor
liquidity on a regular basis using the daily mean.
Daily liquidity, measured by mean daily trading volume on the London Stock
Exchange, improved significantly, increasing by 35.7% over the six months to
31 July 2024 from 108,438 to 147,096.
Managing the balance sheet
Effective and prudent balance sheet management is critical when running a
closed-ended vehicle investing into a portfolio of private market funds with
varying cash flow profiles. This is particularly true for a company such as
HVPE which maintains a large pipeline of unfunded commitments (the "Investment
Pipeline"), which is the amount of capital committed to an underlying
HarbourVest fund, but not yet drawn down for investments.
An update on the Balance Sheet Strength KPIs can be found on page 17. This
section aims to outline HVPE's approach to managing its balance sheet and
explain the steps it takes to ensure that the Company is sufficiently
resourced in preparation for periods of significant market stress.
The Importance of the Credit Facility
HVPE makes commitments to HarbourVest funds, which typically call capital over
a period of several years. This long-duration cash flow profile necessitates a
large pipeline of unfunded commitments in order to ensure that the Company
remains approximately fully invested over time - this is known as an
over-commitment strategy and is critical to optimising long-term NAV per share
growth. In most years, the capital called from HVPE by the HarbourVest funds
is taken from the cash distributions flowing from liquidity events within the
portfolio. At times, however, capital calls will exceed distributions,
potentially by a meaningful amount, and it may be necessary to draw additional
amounts on the credit facility and maintain a net debt position to fund the
difference. A subsequent year may see the reverse situation, with net positive
cash flow used to repay surplus borrowing should the Company return to a net
cash position. In this way, the credit facility acts as a working capital
buffer and enables HVPE to manage its commitments to the level required in
order to optimise returns through the cycle.
In June 2024, HVPE secured a new larger credit line to provide an enhanced
level of support for its balance sheet, reflecting the strong growth in HVPE's
net assets to $4.0bn. This restores the credit facility to a size equivalent
to approximately 30% of NAV, comparable to 2015-2019 levels. This new $1.2
billion multi-currency credit facility (increased from $800 million), adds
Ares Management Credit funds and Apollo-managed funds as new syndicate members
to join two existing lenders, Mitsubishi UFJ Trust and Banking Corporation and
The Guardians of New Zealand Superannuation, with the new syndicate
demonstrating their confidence in HVPE's portfolio and business model.
In the six months to 31 July 2024, HVPE received cash distributions of $136
million while funding capital calls of $270 million for new investments. The
result was net negative portfolio cash flow of $134 million over the reporting
period. Additionally, there were non-portfolio net cash outflows of $71
million, primarily related to buybacks and operating expenses. Therefore, to
ensure that HVPE had sufficient liquid resources to meet its near-term
obligations, and to satisfy the requirement to draw a minimum of 40% of the
new facility, HVPE initiated a further net draw of $205 million on its credit
facility during the period. This leaves HVPE with $720 million remaining of
its credit facility as at 31 July 2024, and 9% geared. The cash balance at 31
July 2024 was $140 million, which was in line with the $140 million as at 31
January 2024, resulting in a net debt position of $340 million.
HarbourVest Fund-level Borrowing
HarbourVest funds employ credit lines for two main purposes: bridging capital
calls and distributions, and financing specific investment projects where the
use of debt may be advantageous. The majority of this fund-level borrowing
represents delayed capital calls, where a proportion of the unfunded
commitments has been invested using subscription credit lines at the
HarbourVest fund level, but the capital has not yet been called from HVPE.
HVPE has indirect exposure, on a look-through basis, to a pro rata share of
borrowing carried on the balance sheets of some of the HarbourVest funds in
which HVPE is a Limited Partner ("LP") (referred to as HarbourVest Partners
("HVP") fund-level borrowing). This borrowing does not represent an additional
liability above and beyond the commitments that HVPE has made to the
HarbourVest funds.
The HVPE team monitors the HarbourVest fund-level borrowing in absolute terms,
and as a percentage of NAV. This borrowing is also considered when evaluating
balance sheet ratios: the Total Commitment Ratio through the Investment
Pipeline, and the Medium-Term Coverage Ratio through the three-year capital
call projections. HarbourVest fund-level borrowing is also included when
assessing the credit facility's loan-to-value ratios, as mentioned in Note 6
"Debt Facility" on page 42. Possible changes in this borrowing (and hence the
timing of capital calls payable by HVPE) are also incorporated into the
balance sheet scenario tests conducted as part of the annual commitment
planning exercise.
As at 31 July 2024, HVPE's share of HVP fund-level borrowing on a look-through
basis was $484 million, a net decrease of $24 million from the $508 million
reported at 31 January 2024. Expressed as a percentage of NAV, this figure
decreased from 13% to 12% over the period. This can be attributed to existing
funds paying down their facilities as they became more mature, coupled with no
new commitments to HarbourVest fund of funds being made in the period. This is
because it is common practice to use working capital facilities at the outset
of a fund's launch to cover initial cash outflows. These amounts are then
repaid in the future with calls from LPs or using distributions received from
investments. Post-period end, on 30 September 2024, the fund-level borrowing
had increased by $14 million and stood at $500 million.
HVPE's period-end total exposure of $484 million includes $448 million (93%)
of bridging finance (also known as subscription line finance) which is used to
delay and smooth the pacing of capital calls to investors in the funds,
including HVPE. Typically, these bridging facilities are committed by the
lenders for a minimum of 12 months. The remaining $36 million (7%) is project
debt, held in the most part by the HarbourVest secondary funds to finance
specific projects. The bridging finance, should it be repaid in full or in
part, will result in capital calls to investors in the HarbourVest funds,
including HVPE, as this type of borrowing represents a portion of HVPE's
existing unfunded commitment (Investment Pipeline) figure. Furthermore, during
the period in which the debt is outstanding, there is a gearing effect on
HVPE's NAV, as the investments have already been made while HVPE's share of
the capital has not yet been called. Project finance has only a very limited
impact on prospective cash flow but does contribute to the gearing effect.
In order to estimate the total potential gearing effect on NAV as at 31 July
2024, an investor should take the total fund-level borrowing figure of $484
million and factor in HVPE's net cash/debt position at the Company level (net
debt $340 million). The resulting net total borrowing figure of $824 million
would translate to an approximate level of look-through gearing of 21% at the
period end. Further detail on the credit facility and the criteria upon which
it can be drawn can be found under Note 6 "Debt Facility" on page 42.
Balance Sheet Ratios(1)
The Board and the Investment Manager refer to three key ratios when assessing
the Company's commitment levels:
1. Total Commitment Ratio ("TCR") (Total exposure to private markets investments as a percentage of NAV)
Investment Portfolio + Investment Pipeline $6.5bn
The level of the TCR is a key determinant of the Company's total commitment Divided by the NAV $4.0bn
capacity for new HarbourVest funds and Co-investments within a given time 165% (167% at 31 January 2024)
period. This ratio fell slightly to 165% at 31 July 2024, as described on
page 17 of the KPIs section.
2. Commitment Coverage Ratio (Short-term liquidity as a percentage of total Investment Pipeline)
Cash + available credit facility $0.9bn
The nature of HVPE's structure, whereby it commits to HarbourVest funds, which Divided by the Investment Pipeline $2.2bn
in turn invest in private equity managers, means that it typically takes 39% (27% at 31 January 2024)
longer for commitments to be drawn down compared with other listed private
equity funds. As a result, to remain fully invested, it has to maintain a
larger pipeline of unfunded commitments. This means that HVPE's Commitment
Coverage Ratio may appear relatively low in comparison with other firms within
its peer group"(2). This ratio has increased, driven by the new, larger credit
facility and a reduction in the investment pipeline.
3. Medium-term Coverage Ratio ("MCR") (A measure of medium-term commitment coverage)
Cash + available credit facility (total $0.9bn) + next 12 months' estimated $1.6bn
HVPE's Investment Manager uses this third specific metric to provide greater distributions ($0.7bn)
insight into the Company's balance sheet position and a more relevant Divided by the next 36 months' estimated investments(3) $1.4bn
comparison with the Company's peer group. This ratio has increased following 117% (88% at 31 January 2024)
an increase in the available credit facility and an increase in forecast cash
distributions.
2. Commitment Coverage Ratio
The nature of HVPE's structure, whereby it commits to HarbourVest funds, which
in turn invest in private equity managers, means that it typically takes
longer for commitments to be drawn down compared with other listed private
equity funds. As a result, to remain fully invested, it has to maintain a
larger pipeline of unfunded commitments. This means that HVPE's Commitment
Coverage Ratio may appear relatively low in comparison with other firms within
its peer group"(2). This ratio has increased, driven by the new, larger credit
facility and a reduction in the investment pipeline.
(Short-term liquidity as a percentage of total Investment Pipeline)
Cash + available credit facility $0.9bn
Divided by the Investment Pipeline $2.2bn
39% (27% at 31 January 2024)
3. Medium-term Coverage Ratio ("MCR")
HVPE's Investment Manager uses this third specific metric to provide greater
insight into the Company's balance sheet position and a more relevant
comparison with the Company's peer group. This ratio has increased following
an increase in the available credit facility and an increase in forecast cash
distributions.
(A measure of medium-term commitment coverage)
Cash + available credit facility (total $0.9bn) + next 12 months' estimated $1.6bn
distributions ($0.7bn)
Divided by the next 36 months' estimated investments(3) $1.4bn
117% (88% at 31 January 2024)
The most recent published ratios, as at 30 September 2024, can be found within
HVPE's latest monthly factsheet on its website: www.hvpe.com
(https://protect.checkpoint.com/v2/___http:/www.hvpe.com___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzo5Y2NjMTY3ZGY5ZjM1YmJlZDQ0MjNjMzkxZmI5NmIwMDo2OjRjOGM6NGI1NGM2Y2Q0MmQxOTAwNjhmMGRmM2IzZTE0OGYzM2ZlMzgwNTQ0OTAzM2I0OWJmMTAyMjRjNDdmOWZlZjAwYjpwOlQ6Tg)
.
(1 ) (These are considered as Alternative Performance Measures. More
detail can be found on pages 62 to 65)
(2 The peer group refers to the UK listed private equity fund of
funds: CT Private Equity Trust, ICG Enterprise Trust, Pantheon International
Plc and Patria Private Equity Trust)
(3 Estimated distributions and estimated investments taken from base
case scenario. For further details on cash flows and modelling, please see
page 24.)
( )
Managing costs
Total Expense Ratio ("TER")
HVPE's TER reflects the total cost incurred by the Company in assembling and
maintaining its portfolio of HarbourVest funds and Co-investments. The figure
is broken down into four distinct categories of expense.
First, there is the direct cost of running the Company in its own right,
encompassing items such as the maintenance of the credit facility, Board fees
and expenses, professional fees, marketing, financial reporting, the services
of a dedicated team from the Investment Manager, and compliance costs. These
costs, totalling 0.57% of average NAV in the 6 months to 31 July 2024 (6
months to 31 July 2023: 0.29%), are categorised as recurring operating
expenses as shown in the first line of the table below. The increase in
operating expenses is due to the increase in size of the credit facility
during the period as well as the amount utilised.
Secondly, operating costs relating to the HarbourVest funds amounted to a
further 0.08% of average NAV in the six-month period (six months to 31 July
2023: 0.09%).
Third, HVPE pays management fees to HarbourVest with respect to the funds in
which it invests, and also for the Secondary Co-investment in Conversus(1)
made alongside the HarbourVest funds. The total of all management fees in the
6 months to 31 July 2024 was equivalent to 0.30% of average NAV (6 months to
31 July 2023: 0.29%).
Finally, performance fees are charged on Secondary investments and Direct
Co-investments (not on Primary investments which make up 49% of HVPE's
portfolio). In total, these accounted for 0.14% of average NAV in the 6 months
to 31 July 2024 (6 months to 31 July 2023: 0.28%). The performance fee figure
varies from period to period and is driven by the performance achieved by the
relevant HarbourVest funds.
Together, these four cost components give a TER, net of interest income
(0.07%), of 1.02% for the 6 months to 31 July 2024. It is important to note
that, while the operating expenses and the management fees do not vary greatly
from one year to the next, the performance fee figure will vary significantly
depending on the returns delivered by the relevant underlying HarbourVest
funds. The TER for the 6 months to 31 July 2024 of 1.02% was 0.20 percentage
points higher than the same period in the prior year, predominantly owing to
an increase in credit facility costs, partially offset by a reduction in
performance fees. The calculation above excludes the fees charged by the
underlying partnerships held by the HarbourVest funds. It is important to note
that all performance data we report to shareholders is, and always has been,
net of all fees and expenses.
Six months 12 months Six months
to 31 July 2024 to 31 January 2024 to 31 July 2023
Operating expenses(2) 0.57% 0.72% 0.29%
HarbourVest fund operating expenses(3) 0.08% 0.22% 0.09%
Management fees(4) 0.30% 0.60% 0.29%
Operating expense ratio 0.95% 1.54% 0.67%
Interest income(5) (0.07)% (0.23)% (0.13)%
Net operating expense ratio 0.88% 1.31% 0.54%
Performance fees(6) 0.14% 0.48% 0.28%
Total net expense ratio(7) 1.02% 1.79% 0.82%
(1 "HVPE Charlotte Co-Investment L.P." in the
Unaudited Condensed Interim Schedule of Investments.)
(2 Operating expenses includes total expenses shown
in the Unaudited Condensed Interim Consolidated Statements of Operations,
excluding management fees from the Secondary Co-investments which are included
in the management fees in this table.)
(3 HVPE's share of fund-level operating expenses
(professional fees and organisational costs) which are included in realised
and unrealised gains (losses) on investments in the Unaudited Condensed
Interim Consolidated Statements of Operations.)
(4 ) (This includes fund-level management fees
payable to HarbourVest which are included in realised and unrealised gains
(losses) on investments in the Unaudited Condensed Interim Consolidated
Statements of Operations, together with the management fees relating to
secondary co-investments noted in 2 above.)
(5 ) (This is shown as interest from cash and
equivalents on the face of the Unaudited Condensed Interim Consolidated
Statement of Operations.)
(6 This includes fund-level performance fees payable
to HarbourVest which are included in realised and unrealised gains (losses) on
investments in the Unaudited Condensed Interim Consolidated Statements of
Operations.)
(7 TERs are calculated using the average NAV over
the respective periods ($4.0 billion in the six months ended 31 July 2024;
$3.9 billion in the 12 months ended 31 January 2024; and $3.9 billion in the
six months ended 31 July 2023).)
Principal risks and uncertainties
Risk Factors and Internal Controls
The Board is responsible for the Company's risk management and internal
control systems, and actively monitors the risks faced by the Company, taking
steps to mitigate and minimise these where possible. Further details on the
Board's governance and oversight can be found on pages 77 to 79 of the 2024
Annual Report and Accounts.
Risk Appetite
The Board's investment risk appetite is to follow an overcommitment policy
that optimises investment returns and associated distributions, allows
balanced, regular investment through economic and investment cycles, and
ensures that it has access to sufficient funding for any potential negative
cash flow situations, including under an Extreme Downside scenario. At the
same time, the funding available to the Company by way of cash balances and
lending facilities is managed to ensure that its cost, by way of interest,
facility fees or cash drag, is reasonable. When considering other risks, the
Board's risk appetite is to balance the potential impact and likelihood of
each risk with its ability and desire to control and mitigate the risk to an
acceptable level. In doing so, as a baseline, the Board will seek to follow
best practice and remain compliant with all applicable laws, rules, and
regulations.
Risk Management
The Directors have adopted a risk management framework which governs how the
Board identifies and measures risks, determines risk appetite, assesses
mitigation and controls, and reports on risks. The Board reviews risks at
least twice a year and receives in depth reports on specific risks as
recommended by the Audit and Risk Committee. The Board divides identified
risks into those which have a higher probability and a significant potential
impact and those which are less material and are monitored on a watch list.
The Board also conducts an annual exercise to identify new or emerging risks.
In considering material risks, the Board identifies those which should be
categorised as principal risks, which are those where the combination of
probability and impact is assessed as being most significant and which the
Board therefore considers could seriously affect the performance, future
prospects, or reputation of the Company.
Risk Commentary
Despite the growth in public equity market indices through the period under
review, and subsequent to the period end, the macroeconomic and geopolitical
outlook remains uncertain with the speed of expected interest rate cuts being
unknown, and the result of the forthcoming US Presidential election too close
to call. Against this backdrop of uncertainty, the share price performance of
listed closed-ended private equity funds has been muted in comparison with
broader public equity markets. This has resulted in the share price discounts
to NAV per share of listed closed-ended private equity funds, including HVPE,
remaining stubbornly wide. The Board's initiative in creating the Distribution
Pool to fund capital returns to shareholders appears to have had a positive
effect. In this environment, the risks relating to public markets, valuation
and popularity of the listed private equity sector remain heightened. The
renewal and increase in the Company's credit facility in June 2024 has
decreased balance sheet risk and ensures the Company's liquidity in even the
most negative modelled scenarios. The Company's Principal Risks remain as
follows:
Principal Risk Description
Performance of HarbourVest The risk posed by the Company's dependence on its Investment Manager.
Public Market Risks The risk of a decline in global public markets or a deterioration in the
economic environment.
Valuation Risk The risk that market instability leads to continuing uncertainty in private
asset valuations based on comparisons with listed companies, together with
general market scepticism about the likely movement in valuation.
Balance Sheet Risks Risks to the Company's balance sheet resulting from its over-commitment
strategy, borrowing arrangements and policy for the use of leverage.
Popularity of Listed Private Equity Sector The risk that investor sentiment towards the listed private equity sector as a
whole may deteriorate significantly.
Trading Liquidity and Price The risk that the number of shares traded in the Company is insufficient to
maintain interest in the stock, or that the discount of the share price to NAV
per share fails to narrow.
INTERIM FINANCIAL STATEMENTS
Independent Review Report
to HarbourVest Global Private Equity Limited
Conclusion
We have been engaged by HarbourVest Global Private Equity Limited (the
"Company") and its subsidiaries (together the "Group") to review the Condensed
Interim Consolidated Financial Statements in the Semi-Annual Report and
Accounts for the six months ended 31 July 2024 which comprises Condensed
Interim Consolidated Statement of Assets and Liabilities, Condensed Interim
Consolidated Statement of Operations, Condensed Interim Consolidated Statement
of Changes in Net Assets, Condensed Interim Consolidated Statement of Cash
Flows, Condensed Interim Consolidated Schedule of Investments and the related
Notes 1 to 11. We have read the other information contained in the Semi-Annual
Report and Accounts and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the
Condensed Interim Consolidated Financial Statements.
Based on our review, nothing has come to our attention that causes us to
believe that the Condensed Interim Consolidated Financial Statements in the
Semi-Annual Report and Accounts for the six months ended 31 July 2024 are not
prepared, in all material respects, in accordance with the accounting
principles generally accepted in the United States of America ("US GAAP") and
the Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements 2410 (UK) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" (ISRE) issued by the Financial
Reporting Council. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in Note 2, the annual Consolidated Financial Statements of the
group are prepared in accordance with US GAAP. The Condensed Interim
Consolidated Financial Statements included in this Semi-Annual Report and
Accounts have been prepared in accordance with US GAAP.
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or that
management have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
this ISRE, however future events or conditions may cause the entity to cease
to continue as a going concern.
Responsibilities of the Directors
The Directors are responsible for preparing the Semi-Annual Report and
Accounts in accordance with the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
In preparing the Semi-Annual Report and Accounts, the directors are
responsible for assessing the company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the Semi-Annual Report and Accounts, we are responsible for
expressing to the Company a conclusion on the Condensed Interim Consolidated
Financial Statements in the Semi-Annual Report and Accounts. Our conclusion,
including our Conclusions relating to Going Concern, are based on procedures
that are less extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to the Company in accordance with guidance
contained in International Standard on Review Engagements 2410 (UK) "Review of
Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Financial Reporting Council. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other
than the Company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
Guernsey, Channel Islands
23 October 2024
Unaudited Condensed Interim Consolidated Statements of Assets and Liabilities
At 31 July and 31 January 2024
In US Dollar 31 July 2024 31 January 2024
(Unaudited) (Audited)
(in thousands*) (in thousands*)
Assets
Investments (Note 4) 4,297,590 4,057,606
Cash and equivalents 139,628 140,156
Other assets 14,572 5,329
Total assets 4,451,790 4,203,091
Liabilities
Amounts due under the credit facility (Note 6) 480,000 275,000
Accounts payable and accrued expenses 9,144 7,479
Accounts payable to HarbourVest Advisers L.P. (Note 9) 57 40
Total liabilities 489,201 282,519
Net assets $3,962,589 $3,920,572
Net assets consist of
Shares, unlimited shares authorised, 76,230,710 and 77,683,508 shares issued 3,962,589 3,920,572
and outstanding at 31 July and 31 January 2024 respectively, no par value
Net assets $3,962,589 $3,920,572
Net asset value per share $51.98 $50.47
* Except net asset value per share
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
The Unaudited Condensed Interim Consolidated Financial Statements on pages 28
to 44 were approved by the Board on 23 October 2024 and were signed on its
behalf by:
Ed
Warner
Steven Wilderspin
Chair
Chair of the Audit and Risk Committee
Unaudited Condensed Interim Consolidated Statements of Operations
For the Six-month Periods Ended 31 July 2024 and 2023
In US Dollars 31 July 2024 31 July 2023
(unaudited) (unaudited)
(in thousands) (in thousands)
Realised and unrealised gains on investments
Net realised gain on investments 67,789 52,041
Net change in unrealised appreciation on investments 38,619 64,806
Net gain on investments 106,408 116,847
Investment income
Interest and dividends from cash and equivalents 2,644 5,125
Other income 111 112
Expenses
Interest expense (Note 6) 15,736 4,228
Commitment fees (Note 6) 3,059 3,315
Investment services (Note 3) 1,436 1,227
Financing expenses 916 1,242
Professional fees 480 536
Directors' fees and expenses (Note 9) 246 230
Marketing expenses 208 203
Management fees (Note 3) 56 59
Other expenses 457 204
Total expenses 22,594 11,244
Net investment loss (19,839) (6,007)
Net increase in net assets resulting from operations $86,569 $110,840
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of Changes in Net Assets
For the six-month period ended 31 July 2024 and 2023
In US Dollars 31 July 2024 31 July 2023
(unaudited) (unaudited)
(in thousands) (in thousands)
Increase in net assets from operations
Net realised gain on investments 67,789 52,041
Net change in unrealised appreciation on investments 38,619 64,806
Net investment loss (19,839) (6,007)
Net increase in net assets resulting from operations 86,569 110,840
Capital Share Transactions
Share repurchase (44,552) (18,188)
Net decrease in net assets from capital share transactions (44,552) (18,188)
Total increase in net assets 42,017 92,652
Net assets at beginning of period 3,920,572 3,837,926
Net assets at end of period $3,962,589 $3,930,578
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of Cash Flows
For the six-month period ended 31 July 2024 and 2023
In US Dollars 31 July 2024 31 July 2023
(unaudited) (unaudited)
(in thousands) (in thousands)
Cash flows from operating activities
Net increase in net assets resulting from operations 86,569 110,840
Adjustments to reconcile net increase in net assets resulting from operations
to net cash used in operating activities:
Net realised gain on investments (67,789) (52,041)
Net change in unrealised appreciation on investments (38,619) (64,806)
Contributions to private equity investments (270,242) (302,010)
Distributions from private equity investments 136,666 144,738
Other (7,561) 5,340
Net cash used in operating activities (160,976) (157,939)
Cash flows from financing activities
Proceeds from borrowing on the credit facility 570,000 200,000
Repayments in respect of the credit facility (365,000) -
Share repurchase (44,552) (18,188)
Net cash provided by financing activities 160,448 181,812
Net change in cash and equivalents (528) 23,873
Cash and equivalents at beginning of period 140,156 197,523
Cash and equivalents at end of period $139,628 $221,396
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Schedule of Investments
At 31 JULY 2024
In US Dollars
Unfunded Amount Distributions
Commitment (unaudited) Invested* (unaudited) Received (unaudited) Fair Value (unaudited) Fair Value as a % of Net Assets
US Funds (in thousands) (in thousands) (in thousands) (in thousands) (unaudited)
HarbourVest Partners V-Partnership Fund L.P. 2,220 46,709 45,924 703 0.0
HarbourVest Partners VI-Direct Fund L.P. 1,313 46,722 41,081 1,797 0.0
HarbourVest Partners VI-Partnership Fund L.P. 5,175 204,623 237,227 464 0.0
HarbourVest Partners VII-Venture Partnership Fund L.P.(†) 2,319 135,290 204,327 1,833 0.0
HarbourVest Partners VIII-Cayman Mezzanine and Distressed Debt Fund L.P. 699 0.0
2,000 48,202 62,811
HarbourVest Partners VIII-Cayman Buyout Fund L.P. 7,500 245,259 419,247 2,672 0.1
HarbourVest Partners VIII-Cayman Venture Fund L.P. 1,000 49,192 91,307 13,931 0.4
HarbourVest Partners 2007 Cayman Direct Fund L.P. 2,250 97,877 165,442 284 0.0
HarbourVest Partners IX-Cayman Buyout Fund L.P. 8,520 62,761 99,980 35,030 0.9
HarbourVest Partners IX-Cayman Credit Opportunities Fund L.P. 1,438 11,111 12,223 5,164 0.1
HarbourVest Partners IX-Cayman Venture Fund L.P. 3,500 66,826 138,397 75,685 1.9
HarbourVest Partners 2013 Cayman Direct Fund L.P. 3,229 97,131 166,055 29,125 0.7
HarbourVest Partners Cayman Cleantech Fund II L.P. 900 19,156 19,421 16,476 0.4
HarbourVest Partners X Buyout Feeder Fund L.P. 34,650 217,378 172,327 227,881 5.8
HarbourVest Partners X Venture Feeder Fund L.P. 6,290 141,764 100,079 257,479 6.5
HarbourVest Partners Mezzanine Income Fund L.P. 8,155 42,067 71,148 14,637 0.4
HarbourVest Partners XI Buyout Feeder Fund L.P. 62,300 287,700 82,498 364,604 9.2
HarbourVest Partners XI Micro Buyout Feeder Fund L.P. 5,655 59,345 19,811 75,421 1.9
HarbourVest Partners XI Venture Feeder Fund L.P. 13,300 176,736 42,421 243,037 6.1
HarbourVest Adelaide Feeder L.P. 6,000 144,000 176,644 1,457 0.0
HarbourVest Partners XII Buyout Feeder Fund L.P. 319,275 175,725 3,935 208,117 5.3
HarbourVest Partners XII Micro Buyout Feeder Fund L.P. 52,800 27,200 579 30,151 0.8
HarbourVest Partners XII Venture Feeder Fund L.P. 84,038 50,963 688 57,227 1.4
HarbourVest Partners XII Venture AIF SCSp 30,550 378 35,321 0.9
84,525
Harbourvest Infrastructure Income Delaware Parallel Partnership 105,296 2.7
- 117,233 38,628
Total US Funds 718,350 2,601,520 2,412,578 1,804,493 45.5
Unfunded Amount Distributions
Commitment (unaudited) Invested* (unaudited) Received (unaudited) Fair Value (unaudited) Fair Value as a % of Net Assets
International/Global Funds (in thousands) (in thousands) (in thousands) (in thousands) (unaudited)
HarbourVest International Private Equity Partners III-Partnership Fund L.P. 3,450 147,729 148,440 387 0.0
Dover Street VII Cayman L.P. 4,250 83,504 118,312 112 0.0
HIPEP VI-Cayman Partnership Fund L.P.** 5,413 117,845 182,369 50,223 1.3
HIPEP VI-Cayman Asia Pacific Fund L.P. 2,500 47,687 60,158 17,117 0.4
HIPEP VI-Cayman Emerging Markets Fund L.P. - 30,059 17,627 19,485 0.5
Dover Street VIII Cayman L.P. 14,400 165,724 263,115 10,778 0.3
HVPE Charlotte Co-Investment L.P. - 93,894 162,267 803 0.0
HarbourVest Global Annual Private Equity Fund L.P. 9,000 91,001 146,276 66,828 1.7
HIPEP VII Partnership Feeder Fund L.P. 9,688 115,313 125,343 122,070 3.1
HIPEP VII Asia Pacific Feeder Fund L.P. 1,200 28,800 23,738 26,758 0.7
HIPEP VII Emerging Markets Feeder Fund L.P. 2,600 17,400 9,747 20,953 0.5
HIPEP VII Europe Feeder Fund L.P.(††) 6,820 64,329 84,575 66,949 1.7
HarbourVest Canada Parallel Growth Fund L.P.(‡‡) 4,254 19,872 15,063 24,762 0.6
HarbourVest 2015 Global Fund L.P. 7,000 93,017 119,502 70,027 1.8
HarbourVest 2016 Global AIF L.P. 15,000 85,026 90,306 75,242 1.9
HarbourVest Partners Co-Investment IV AIF L.P. 7,000 93,000 96,234 75,484 1.9
Dover Street IX Cayman L.P. 10,000 90,000 93,465 58,848 1.5
HarbourVest Real Assets III Feeder L.P. 3,750 46,250 16,248 46,352 1.2
HarbourVest 2017 Global AIF L.P. 18,000 82,021 66,117 86,520 2.2
HIPEP VIII Partnership AIF L.P. 20,825 149,175 38,655 187,653 4.7
Secondary Overflow Fund III L.P. 22,841 62,316 60,633 61,153 1.5
HarbourVest Asia Pacific VIII AIF Fund L.P. 3,375 46,631 13,191 48,545 1.2
HarbourVest 2018 Global Feeder Fund L.P. 12,250 57,750 25,413 75,192 1.9
HarbourVest Partners Co-Investment V Feeder Fund L.P. 22,500 77,548 35,234 122,447 3.1
HarbourVest Real Assets IV Feeder L.P. 10,000 40,000 12,745 42,572 1.1
HarbourVest 2019 Global Feeder Fund L.P. 26,000 74,007 16,532 104,854 2.6
HarbourVest Credit Opportunities 1,500 48,500 11,372 50,166 1.3
Fund II L.P.
Dover Street X Feeder Fund L.P. 34,500 115,518 40,453 134,691 3.4
Secondary Overflow Fund IV L.P. 47,402 82,004 26,902 94,521 2.4
HIPEP IX Feeder Fund L.P. 300,700 184,308 15,581 207,217 5.2
HarbourVest 2020 Global Feeder Fund L.P. 9,000 41,001 4,147 47,690 1.2
HarbourVest Partners Co-Investment VI Feeder Fund L.P. 18,750 106,256 378 121,975 3.1
HarbourVest Asia Pacific 5 Feeder Fund L.P. 190,500 109,500 - 112,473 2.8
HarbourVest 2021 Global Feeder Fund L.P. 65,347 104,705 2,901 117,969 3.0
HarbourVest 2022 Global Feeder Fund L.P. 1,185 48,115 1.2
62,500 37,500
Dover Street XI Feeder Fund L.P. 202,500 47,500 - 65,589 1.7
HarbourVest Credit Opportunities III Feeder Fund L.P. 0.0
75,000 - - 464
HIPEP X Feeder Fund L.P. 125,000 - - 1,326 0.0
HarbourVest Infrastructure Opportunities III Feeder Fund L.P. 75,000 - - 1,036 0.0
Secondary Overflow Fund V L.P. - - - (77) 0.0
HarbourVest Partners Stewardship Feeder Fund L.P. 27,388 7,666 - 7,827 0.2
HarbourVest Private Equity Continuation Solutions Feeder Fund L.P 35,000 - - - 0.0
Total International/Global Funds 1,512,201 2,904,356 2,144,226 2,493,097 62.9
Total Investments 2,230,551 5,505,876 4,556,804 4,297,590 108.4
* Includes purchase of limited partner interests for shares and cash
at the time of HVPE's IPO.
† Includes ownership interests in HarbourVest Partners VII-Cayman
Partnership entities.
** Fund denominated in euros. Commitment amount is €100,000,000.
†† Fund denominated in euros. Commitment amount is €63,000,000.
‡‡ Fund denominated in Canadian dollars. Commitment amount is
C$32,000,000.
As of 31 July 2024, the cost basis of partnership investments is
$2,897,520,000.
Totals and subtotals may not recalculate due to rounding.
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
At 31 january 2024 (audited)
In US Dollars
Unfunded Amount Distributions
Commitment (unaudited) Invested* (unaudited) Received (unaudited) Fair Value (unaudited) Fair Value as a % of Net Assets
US Funds (in thousands) (in thousands) (in thousands) (in thousands) (unaudited)
HarbourVest Partners V-Partnership Fund L.P. 2,220 46,709 45,924 802 0.0
HarbourVest Partners VI-Direct Fund L.P. 1,313 46,722 41,081 1,796 0.0
HarbourVest Partners VI-Partnership Fund L.P. 5,175 204,623 237,227 464 0.0
HarbourVest Partners VII-Venture Partnership Fund L.P.(†) 2,319 135,290 204,327 2,127 0.1
HarbourVest Partners VIII-Cayman Mezzanine and Distressed Debt Fund L.P. 699 0.0
2,000 48,202 62,811
HarbourVest Partners VIII-Cayman Buyout Fund L.P. 7,500 245,259 417,067 4,931 0.1
HarbourVest Partners VIII-Cayman Venture Fund L.P. 1,000 49,192 91,307 13,875 0.4
HarbourVest Partners 2007 Cayman Direct Fund L.P. 2,250 97,877 165,442 288 0.0
HarbourVest Partners IX-Cayman Buyout Fund L.P. 8,520 62,761 92,387 43,194 1.1
HarbourVest Partners IX-Cayman Credit Opportunities Fund L.P. 1,438 11,111 12,034 6,029 0.2
HarbourVest Partners IX-Cayman Venture Fund L.P. 3,500 66,826 132,015 84,464 2.2
HarbourVest Partners 2013 Cayman Direct Fund L.P. 3,229 97,131 159,293 36,077 0.9
HarbourVest Partners Cayman Cleantech Fund II L.P. 900 19,156 18,730 17,466 0.4
HarbourVest Partners X Buyout Feeder Fund L.P. 34,650 217,378 165,062 233,547 6.0
HarbourVest Partners X Venture Feeder Fund L.P. 6,290 141,764 99,019 258,319 6.6
HarbourVest Partners Mezzanine Income Fund L.P. 8,155 42,067 63,788 20,675 0.5
HarbourVest Partners XI Buyout Feeder Fund L.P. 90,300 259,700 82,013 324,967 8.3
HarbourVest Partners XI Micro Buyout Feeder Fund L.P. 5,655 59,345 19,811 73,692 1.9
HarbourVest Partners XI Venture Feeder Fund L.P. 13,300 176,736 42,421 236,782 6.0
HarbourVest Adelaide Feeder L.P. 6,000 144,000 176,644 1,455 0.0
HarbourVest Partners XII Buyout Feeder Fund L.P. 356,400 138,600 3,268 164,565 4.2
HarbourVest Partners XII Micro Buyout Feeder Fund L.P. 58,000 22,000 - 24,486 0.6
HarbourVest Partners XII Venture Feeder Fund L.P. 100,238 34,763 240 39,087 1.0
HarbourVest Partners XII Venture AIF SCSp 23,431 0.6
95,450 19,625 -
Harbourvest Infrastructure Income Delaware Parallel Partnership 104,241 2.7
- 117,233 37,964
Total US Funds 815,802 2,504,070 2,369,876 1,717,458 43.8
Unfunded Amount Distributions
Commitment (unaudited) Invested* (unaudited) Received (unaudited) Fair Value (unaudited) Fair Value as a % of Net Assets
International/Global Funds (in thousands) (in thousands) (in thousands) (in thousands) (unaudited)
HarbourVest International Private Equity Partners III-Partnership Fund L.P. 3,450 147,729 148,440 402 0.0
Dover Street VII Cayman L.P. 4,250 83,504 118,312 122 0.0
HIPEP VI-Cayman Partnership Fund L.P.** 5,409 117,845 177,872 56,878 1.5
HIPEP VI-Cayman Asia Pacific Fund L.P. 2,500 47,687 59,275 19,589 0.5
HIPEP VI-Cayman Emerging Markets Fund L.P. - 30,059 15,319 22,461 0.6
Dover Street VIII Cayman L.P. 14,400 165,724 262,515 13,083 0.3
HVPE Charlotte Co-Investment L.P. - 93,894 162,267 831 0.0
HarbourVest Global Annual Private Equity Fund L.P. 9,000 91,001 137,497 74,761 1.9
HIPEP VII Partnership Feeder Fund L.P. 10,625 114,375 116,405 127,623 3.3
HIPEP VII Asia Pacific Feeder Fund L.P. 1,500 28,500 21,232 29,525 0.8
HIPEP VII Emerging Markets Feeder Fund L.P. 2,600 17,400 8,267 22,389 0.6
HIPEP VII Europe Feeder Fund L.P.(††) 6,815 64,329 79,077 68,485 1.7
HarbourVest Canada Parallel Growth Fund L.P.(‡‡) 4,369 19,872 13,707 26,735 0.7
HarbourVest 2015 Global Fund L.P. 7,000 93,017 114,791 74,638 1.9
HarbourVest 2016 Global AIF L.P. 16,000 84,026 85,450 77,026 2.0
HarbourVest Partners Co-Investment IV AIF L.P. 7,000 93,000 92,953 84,382 2.2
Dover Street IX Cayman L.P. 12,000 88,000 91,612 60,234 1.5
HarbourVest Real Assets III Feeder L.P. 3,750 46,250 13,607 47,312 1.2
HarbourVest 2017 Global AIF L.P. 19,500 80,521 62,587 87,239 2.2
HIPEP VIII Partnership AIF L.P. 28,475 141,525 36,116 175,297 4.5
Secondary Overflow Fund III L.P. 22,841 62,316 59,234 62,341 1.6
HarbourVest Asia Pacific VIII AIF Fund L.P. 3,375 46,631 11,092 50,461 1.3
HarbourVest 2018 Global Feeder Fund L.P. 13,300 56,700 21,628 75,861 1.9
HarbourVest Partners Co-Investment V Feeder Fund L.P. 22,500 77,548 19,777 124,512 3.2
HarbourVest Real Assets IV Feeder L.P. 13,500 36,500 11,664 39,390 1.0
HarbourVest 2019 Global Feeder Fund L.P. 26,000 74,007 15,885 99,459 2.5
HarbourVest Credit Opportunities 1,500 48,500 8,939 49,891 1.3
Fund II L.P.
Dover Street X Feeder Fund L.P. 44,250 105,768 37,683 125,128 3.2
Secondary Overflow Fund IV L.P. 49,931 79,475 26,807 87,813 2.2
HIPEP IX Feeder Fund L.P. 329,800 155,208 11,752 177,838 4.5
HarbourVest 2020 Global Feeder Fund L.P. 10,750 39,251 4,147 43,755 1.1
HarbourVest Partners Co-Investment VI Feeder Fund L.P. 37,500 87,506 378 95,003 2.4
HarbourVest Asia Pacific 5 Feeder Fund L.P. 255,000 45,000 - 37,406 1.0
HarbourVest 2021 Global Feeder Fund L.P. 76,822 93,230 2,790 103,962 2.7
HarbourVest 2022 Global Feeder Fund L.P. 1,185 36,161 0.9
71,000 29,000
Dover Street XI Feeder Fund L.P. 207,500 42,500 - 57,126 1.5
HarbourVest Credit Opportunities III Feeder Fund L.P. 0.0
75,000 - - (63)
HIPEP X Feeder Fund L.P. 125,000 - - 964 0.0
HarbourVest Infrastructure Opportunities III Feeder Fund L.P. 75,000 - - 268 0.0
Secondary Overflow Fund V L.P. - - - (75) 0.0
HarbourVest Partners Stewardship Feeder Fund L.P. 30,888 4,166 - 3,938 0.1
HarbourVest Private Equity Continuation Solutions Feeder Fund L.P 35,000 - - - 0.0
Total International/Global Funds 1,685,100 2,731,565 2,050,263 2,340,149 59.8
Total Investments 2,500,899 5,235,635 4,420,139 4,057,606 103.5
* Includes purchase of limited partner interests for shares and cash
at the time of HVPE's IPO.
† Includes ownership interests in HarbourVest Partners VII-Cayman
Partnership entities.
§ Fund denominated in euros. Commitment amount is €47,450,000.
** Fund denominated in euros. Commitment amount is €100,000,000.
†† Fund denominated in euros. Commitment amount is €63,000,000.
‡‡ Fund denominated in Canadian dollars. Commitment amount is
C$32,000,000.
As of 31 January 2024, the cost basis of partnership investments is
$2,696,155,000.
Totals and subtotals may not recalculate due to rounding.
The accompanying notes are an integral part of the Unaudited Condensed Interim
Consolidated Financial Statements.
Notes to Unaudited Condensed Interim Consolidated Financial Statements
Note 1 Company Organisation and Investment Objective
HarbourVest Global Private Equity Limited (the "Company" or "HVPE") is a
closed-ended investment company registered with the Registrar of Companies in
Guernsey under The Companies (Guernsey) Law, 2008. The Company's registered
office is BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey GY1
1WA.
The Company was incorporated and registered in Guernsey on 18 October 2007.
HVPE is designed to offer shareholders long-term capital appreciation by
investing in a diversified portfolio of private equity investments. The
Company invests in private equity through private equity funds and may
make Co-investments or other opportunistic investments. The Company is
managed by HarbourVest Advisers L.P. (the "Investment Manager"), an affiliate
of HarbourVest Partners, LLC ("HarbourVest"), a private equity fund-of-funds
manager. The Company intends to invest in and alongside existing and
newly-formed HarbourVest funds. HarbourVest is a global private equity fund of
funds manager and typically invests capital in Primary partnerships, Secondary
investments, and Direct investments across vintage years, geographies,
industries, and strategies.
Operations of the Company commenced on 6 December 2007, following the initial
global offering of the Class A Ordinary Shares.
Share Capital
At 31 July 2024, the Company's 76,230,710 shares were listed on the London
Stock Exchange under the symbol "HVPE". The shares are entitled to the income
and increases and decreases in the net asset value ("NAV") of the Company, and
to any dividends declared and paid, and have full voting rights. Dividends may
be declared by the Board of Directors and paid from available assets subject
to the Directors being satisfied that the Company will, immediately after
payment of the dividend, satisfy the statutory solvency test prescribed by The
Companies (Guernsey) Law, 2008. The company repurchased 1,452,798 shares
during the period ended 31 July 2024.
Dividends would be paid to shareholders pro rata to their shareholdings.
The shareholders must approve any amendment to the Memorandum and Articles of
Incorporation. The approval of 75% of the shares is required in respect of any
changes that are administrative in nature, any material change from the
investment strategy and/or investment objective of the Company, or any
material change to the terms of the Investment Management Agreement.
There is no minimum statutory capital requirement under Guernsey law.
Investment Manager, Company Secretary, and Administrator
The Directors have delegated certain day-to-day operations of the Company to
the Investment Manager and the Company Secretary and Administrator, under
advice of the Directors, pursuant to service agreements with those parties,
within the context of the strategy set by the Board. The Investment Manager is
responsible for, among other things, selecting, acquiring, and disposing of
the Company's investments, carrying out financing, cash management, and risk
management activities, providing investment advisory services, including with
respect to HVPE's investment policies and procedures, and arranging for
personnel and support staff of the Investment Manager to assist in the
administrative and executive functions of the Company.
Directors
The Directors are responsible for the determination of the investment policy
of the Company on the advice of the Investment Manager and have overall
responsibility for the Company's activities. This includes the periodic review
of the Investment Manager's compliance with the Company's investment policies
and procedures, and the approval of certain investments. A majority of
Directors must be independent Directors and not affiliated with HarbourVest
or any affiliate of HarbourVest.
Note 2 Summary of Significant Accounting Policies
Accounting policies have been applied consistently as presented in the latest
audited accounts which have been prepared under US GAAP.
Note 3 Material Agreements and Related Fees
Administrative Agreement
The Company has retained BNP Paribas S.A., Guernsey Branch ("BNP") as Company
Secretary and Administrator. Fees for these services are paid as invoiced by
BNP and include an administration fee of £50,000 per annum, a secretarial fee
of £60,000 per annum, a compliance services fee of £15,000 per annum, ad-hoc
service fees, and reimbursable expenses. During the periods ended 31 July 2024
and 2023, fees of $81,000 and $79,000, respectively, were incurred for BNP and
are included as other expenses in the Unaudited Condensed Interim Consolidated
Statements of Operations.
Registrar
The Company has retained Link Asset Services as share registrar. Fees for this
service include a base fee of £15,500, plus other miscellaneous expenses.
During the periods ended 31 July 2024 and 2023, registrar fees of $10,000 and
$10,000, respectively, were incurred and are included as other expenses in the
Unaudited Condensed Interim Consolidated Statements of Operations.
Independent Auditor's Fees
For the periods ended 31 July 2024 and 2023, auditor fees of $273,000 and
$245,000 were accrued, respectively, and are included in professional fees in
the Unaudited Condensed Interim Consolidated Statements of Operations. The 31
July 2024 and 2023 figures include $165,000 and $140,000, respectively, which
represents approximately half of each period's respective annual audit fee.
The 31 July 2024 and 2023 figures also include a $3,000 credit and a $6,000
expense, respectively, related to the prior financial year's audit fee. In
addition, the 31 July 2024 and 2023 figures include fees of $111,000 and
$99,000, respectively, for audit-related services due to the Auditor, Ernst
& Young LLP, conducting a review of the Interim Financial Statements for
each period end. There were no other non-audit fees paid to the Auditor by the
Company during the periods ended 31 July 2024 and 2023.
Investment Management Agreement
The Company has retained HarbourVest Advisers L.P. as the Investment Manager.
The Investment Manager is reimbursed for costs and expenses incurred on behalf
of the Company in connection with the management and operation of the Company.
During the periods ended 31 July 2024 and 2023, reimbursements for services
provided by the Investment Manager were $1,436,000 and $1,227,000,
respectively. As of 1 February 2022, the Investment Manager is reimbursed on a
fixed fee basis rather than an hourly basis. The Investment Manager does not
directly charge HVPE management fees or performance fees other than with
respect to parallel investments. However, as an investor in the HarbourVest
funds, HVPE is charged the same management fees and is subject to the same
performance allocations as other investors in such HarbourVest funds.
During the periods ended 31 July 2024 and 2023, HVPE had one parallel
investment: HarbourVest Structured Solutions II, L.P. (via HVPE Charlotte
Co-Investment L.P.). Management fees paid for the parallel investment made by
the Company were consistent with the fees charged by the funds alongside
which the parallel investment was made during the periods ended 31 July 2024
and 2023.
Management fees included in the Unaudited Condensed Interim Consolidated
Statements of Operations are shown in the table below:
2024 2023
(unaudited) (unaudited)
(in thousands) (in thousands)
HVPE Charlotte Co-Investment L.P. $56 $59
For the periods ended 31 July 2024 and 2023, management fees on the HVPE
Charlotte Co-Investment L.P. investment were calculated based on a weighted
average effective annual rate of 0.06% and 0.07% respectively, on capital
originally committed, net of management fee offsets to the parallel
investment.
Note 4 Investments
In accordance with the authoritative guidance on fair value measurements and
disclosures under generally accepted accounting principles in the US, the
Company discloses the fair value of its investments in a hierarchy that
prioritises the inputs to valuation techniques used to measure the fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The guidance
establishes three levels of the fair value hierarchy as follows:
Level 1 - Inputs that reflect unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to access at
the measurement date;
Level 2 - Inputs other than quoted prices that are observable for the asset or
liability either directly or indirectly, including inputs in markets that are
not considered to be active; and
Level 3 - Inputs that are unobservable.
Level 3 investments include limited partnership interests in HarbourVest
funds which report under US generally accepted accounting principles. Inputs
used to determine fair value are primarily based on the most recently reported
NAV provided by the underlying investment manager as a practical expedient
under ASC Topic 820. The fair value is then adjusted for known investment
operating expenses and subsequent transactions, including investments,
realisations, changes in foreign currency exchange rates, and changes in value
of private and public securities.
Income derived from investments in HarbourVest funds is recorded using the
equity pick-up method. Under the equity pick-up-method of accounting, the
Company's proportionate share of the net income (loss) and net realised gains
(losses), as reported by the HarbourVest funds, is reflected in the
Consolidated Statements of Operations as net realised gain (loss) on
investments. The Company's proportionate share of the aggregate increase or
decrease in unrealised appreciation or depreciation, as reported by the
HarbourVest funds, is reflected in the Consolidated Statements of Operations
as net change in unrealised appreciation on investments.
Because of the inherent uncertainty of these valuations, the estimated fair
value may differ significantly from the value that would have been used had a
ready market for this security existed, and the difference could be material.
During the periods ended 31 July 2024 and 2023, the Company made contributions
of $270,242,000 and $302,010,000, respectively, to Level 3 investments and
received distributions of $136,666,000 and $144,738,000, respectively, from
Level 3 investments. As of 31 July 2024, all the Company's investments,
amounting to $4,297,590,000 are classified as Level 3. As of 31 January 2024,
all the Company's investments, amounting to $4,057,606,000 were classified as
Level 3.
Note 5 Commitments
As of 31 July 2024, the Company had unfunded investment commitments to other
limited partnerships of $2,230,551,000 which are payable upon notice by the
partnerships to which the commitments have been made. As of 31 January 2024,
the Company had unfunded investment commitments to other limited partnerships
of $2,500,899,000.
The Investment Manager is not entitled to any direct remuneration (save
expenses incurred in the performance of its duties) from the Company, instead
deriving its fees from the management fees and carried interest payable by the
Company on its investments in underlying HarbourVest Funds. The Investment
Management Agreement (the "IMA"), which was amended and restated on 30 July
2019 and again on 31 January 2023, may be terminated by either party by giving
12 months' notice. In the event of termination within ten years and three
months of the date of the listing on the Main Market on 9 September 2015, the
Company would be required to pay a contribution, which would have been $1.1
million at 31 July 2024 and $1.9 million at 31 July 2023, as reimbursement of
the Investment Manager's remaining unamortised IPO costs. In addition, the
Company would be required to pay a fee equal to the aggregate of the
management fees for the underlying investments payable over the course of the
12-month period preceding the effective date of such termination to the
Investment Manager.
Note 6 Debt Facility
As of 31 January 2024, the Company had an agreement with Mitsubishi UFJ Trust
and Banking Corporation, New York Branch, Credit Suisse AG, London Branch and
The Guardians of New Zealand Superannuation as manager and administrator of
the New Zealand Superannuation Fund for the provision of a multi-currency
revolving credit facility (the "2023 Facility") with a termination date no
earlier than January 2026, subject to usual covenants. During the period, the
Company terminated the Facility and entered into an agreement with Apollo
Management International LLP ("Apollo"), Ares Management Limited ("Ares"),
Mitsubishi UFJ Trust and Banking Corporation, London Branch ("MUFG"), and
Guardians of New Zealand Superannuation as manager and administrator of the
New Zealand Superannuation Fund ("NZS") for the provision of a multi-currency
revolving credit facility (the "2024 Facility") with a termination date no
earlier than June 2029, subject to usual covenants. The Apollo commitment was
$350 million, the Ares commitment was $350 million, the MUFG commitment was
$300 million and the NZS commitment was $200 million. Collectively referred to
as the Facilities.
Amounts borrowed against the Facilities accrue interest at an aggregate rate
of Term SOFR/SONIA/EURIBOR, a margin, and, under certain circumstances, a
mandatory minimum cost. The Facilities are secured by the private equity
investments and cash and equivalents of the Company, as defined in the
agreement and are subject to certain loan-to-value ratios (which factor in
borrowing on the Facilities and fund-level borrowing) and portfolio diversity
tests applied to the Investment Portfolio of the Company. At 31 July 2024 and
31 January 2024, there was $480,000,000 in debt outstanding against the 2024
Facility and $275,000,000 in debt outstanding against the 2023 Facility,
respectively. For the periods ended 31 July 2024 and 2023, interest of
$15,736,000 and $4,228,000, respectively, was incurred. Included in other
assets at 31 July 2024 and 31 January 2024 are deferred financing costs of
$13,970,000 and $5,066,000, respectively, related to refinancing the
Facilities. The deferred financing costs are amortised on the terms of the
Facilities. For the 2023 Facility, the Company was required to pay a
non-utilisation fee of 100 basis points per annum for the Credit Suisse
commitment and 90 basis points per annum for the MUFG commitment and a
utilisation fee of 40 basis points per annum for the Credit Suisse commitment.
For the 2024 Facility, the Company is required to pay a non-utilisation fee of
100 basis points per annum for all commitments. Together, these are presented
as Commitment fees on the Unaudited Condensed Interim Consolidated Statement
of Operations. For the periods ended 31 July 2024 and 2023, $3,059,000 and
$3,315,000, respectively, in commitment fees have been incurred.
Note 7 Financial Highlights
For the Six-month Periods Ended 31 July 2024 and 2023
In US Dollars 2024 2023 (Unaudited)
(Unaudited)
Shares
Per share operating performance:
Net asset value, beginning of period $50.47 $48.52
Net realised and unrealised gains 1.38 1.48
Net investment loss (0.27) (0.08)
Total from investment operations 1.11 1.40
Net increase from repurchase of Class A shares 0.40 0.20
Net asset value, end of period $51.98 $50.12
Market value, end of period $33.50* $29.20*
Total return at net asset value 3.0% 3.3%
Total return at market value 14.9% 7.7%
Ratios to average net assets
Expenses(†) 0.57% 0.29%
Net investment loss (0.50)% (0.15)%
* Represents the US dollar-denominated share price.
† Does not include operating expenses of
underlying investments.
Note 8 Publication and Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets less its
total liabilities. The NAV per share is calculated by dividing the net asset
value by the number of shares in issue on that day. The Company publishes the
NAV per share of the shares as calculated, monthly in arrears, at each month
end, generally within 20 days.
Note 9 Related Party Transactions
Other amounts payable to HarbourVest Advisers L.P. of $57,000 and $40,000
represent expenses of the Company incurred in the ordinary course of business,
which have been paid by and are reimbursable to the Investment Manager at 31
July 2024 and 31 January 2024, respectively.
Other income relates to income received from a revenue sharing agreement
entered into with the HarbourVest Infrastructure Income Delaware Parallel
Partnership ("HIIP") investment. Through such agreement, the Company is
entitled to 10% of the management fee revenue received by HarbourVest from
HIIP, provided that HarbourVest remains as HIIP's exclusive investment
manager.
Directors' fees and expenses, primarily compensation, of $246,000 and $230,000
were incurred during the periods ended 31 July 2024 and 2023, respectively.
Note 10 Indemnifications
General Indemnifications
In the normal course of business, the Company may enter into contracts that
contain a variety of representations and warranties and which provide for
general indemnifications. The Company's maximum exposure under these
arrangements is unknown, as this would involve future claims that may be made
against the Company that have not yet occurred. Based on the prior experience
of the Investment Manager, the Company expects the risk of loss under these
indemnifications to be remote.
Investment Manager Indemnifications
Consistent with standard business practices in the normal course of business,
the Company has provided general indemnifications to the Investment Manager,
any affiliate of the Investment Manager and any person acting on
behalf of the Investment Manager or such affiliate when they act in good
faith, in the best interest of the Company. The Company is unable to develop
an estimate of the maximum potential amount of future payments that could
potentially result from any hypothetical future claim but expects the risk of
having to make any payments under these general business indemnifications to
be remote.
Directors' and Officers' Indemnifications
The Company's Articles of Incorporation provide that the Directors, managers
or other officers of the Company shall be fully indemnified by the Company
from and against all actions, expenses, and liabilities which they may incur
by reason of any contract entered into or any act in or about the execution of
their offices, except such (if any) as they shall incur by or through their
own negligence, default, breach of duty, or breach of trust, respectively.
Note 11 Subsequent Events
In the preparation of the Interim Financial Statements, the Company has
evaluated the effects, if any, of events occurring after the balance sheet
date.
In this period the Company made purchases of 592,826 of its ordinary shares
for cancellation, for total consideration of £14,218,768.
There were no other events or material transactions subsequent to 31 July 2024
that required recognition or disclosure in the Unaudited Condensed Interim
Consolidated Financial Statements.
Alternative Performance Measures(1)
Reconciliation of Share Price Discount to Net Asset Value per Share
The share price discount to NAV per share will vary depending on which NAV per
share figure is used. The discount referred to elsewhere in this report is
calculated using the live NAVs per share available in the market as at 31
January 2024 and 31 July 2024, those being the 31 December 2023 and 30 June
2024 estimates of $50.04 (sterling equivalent £39.31) and $51.22 (sterling
equivalent £40.48), respectively, adjusted for GBP/USD foreign exchange
movement, against share prices of £23.15 at 31 January 2024 and £26.10 at
31 July 2024.
The table below outlines the notional discounts to the share price at 31 July
2024, based on the NAVs per share published after this date (31 July 2024
estimate and final). Movements between the published NAVs per share for the
same calendar date largely arise as further underlying fund valuations are
received, and as adjustments are made for public markets, foreign exchange and
operating expenses.
(1 Note: Totals and subtotals may not recalculate
due to rounding)
Date of NAV (estimate and final) NAV per Share NAV Converted at 31 July 2024 GBP/USD Exchange Rate (1.2855) Share Price at 31 July 2024 Discount to NAV at 31 July 2024
Estimated NAV at 30 June 2024 (published 23 July 2024) $51.22 £39.84 £26.10 34%
Estimated NAV at 31 July 2024 (published 22 August 2024) $51.46 £40.03 £26.10 35%
Final NAV (US GAAP) at 31 July 2024 (published 24 October 2024) $51.98 £40.44 £26.10 35%
Annualised Outperformance of FTSE AW TR Index Over the Last 10 Years
NAV (US dollar) Compound Annual Growth Rate ("CAGR")
31 July 2014 $15.35
31 July 2024 $51.98
Elapsed time (years) 10.0
US dollar CAGR 13.0%
FTSE AW TR Index (US dollar) CAGR
31 July 2014 334.36
31 July 2024 816.86
Elapsed time (years) 10.0
FTSE AW TR Index CAGR 9.3%
Annualised outperformance of FTSE AW TR Index Over the Last 10 Years
calculation
13.0% minus 9.3% 3.6 percentage points ("pp")
KPIs (pages 16 to 17)
The KPI metrics show the movement between the NAV per share (in US dollars)
and the share price in sterling and translated into US dollars. Relative to
the FTSE AW TR Index, this is the difference in movement between the
year-on-year change of this index vs the particular HVPE KPI.
NAV per Share ($) and Relative Performance
Date NAV per Share Absolute Performance FTSE AW TR Index Movement Relative Performance vs FTSE AW TR
31 January 2019 $24.09
31 January 2020 $27.58 +14.5% +16.7% -2.2pp
31 January 2021 $35.97 +30.4% +17.4% +13.0pp
31 January 2022 $49.11 +36.5% +13.8% +22.8pp
31 January 2023 $48.52 -1.2% -7.3% +6.1pp
31 January 2024 $50.47 +4.0% +15.3% -11.3pp
31 July 2024 $51.98 +3.0% +12.6% -9.6pp
12-month relative performance (July to July)
Date NAV per Share Absolute Performance FTSE AW TR Index Movement Relative Performance vs FTSE AW TR
31 July 2020 $28.18
31 July 2021 $44.11 +56.5% +33.8% +22.7pp
31 July 2022 $47.76 +8.3% -9.9% +18.2pp
31 July 2023 $50.12 +4.9% +13.6% -8.6pp
31 July 2024 $51.98 +3.7% +17.6% -13.9pp
10-year Outperformance of FTSE AW TR
NAV (US dollar)
31 July 2014 $15.35
31 July 2024 $51.98
US dollar total return 239%
FTSE AW TR (US dollar)
31 July 2014 334.36
31 July 2024 816.86
FTSE AW TR total return 144%
10-year outperformance of FTSE AW TR calculation
239% minus 144% 94pp
Total Shareholder Return (£)
Date Share Period-on-period Change
Price (£)
31 January 2019 £14.26
31 January 2020 £18.36 +28.8%
31 January 2021 £18.70 +1.9%
31 January 2022 £27.75 +48.4%
31 January 2023 £22.10 -20.4%
31 January 2024 £23.15 +4.8%
31 July 2024 £26.10 +12.7%
12-month relative performance (July to July)
Date Share Period-on-period Change
Price (£)
31 July 2020 £15.28
31 July 2021 £22.50 +47.3%
31 July 2022 £24.10 +7.1%
31 July 2023 £22.50 -6.6%
31 July 2024 £26.10 +16.0%
Total Commitment Ratio
(Total exposure to private markets investments as a percentage of NAV)
31 July 2024 ($m) 31 January 2024 ($m)
Investment Portfolio $4,298 $4,058
Investment Pipeline $2,231 $2,501
Total $6,528 $6,559
NAV $3,963 $3,921
Total Commitment Ratio 165% 167%
Net Portfolio Cash Flow
(The difference between calls and distributions over the reporting period)
31 July 2024 ($m) 31 January 2024 ($m)
Calls -$270 -$593
Distributions $136 $310
Net Portfolio Cash Flow -$134 -$283
Managing the Balance Sheet
Medium-term Coverage Ratio
(A measure of medium-term commitment coverage)
31 July 2024 ($m) 31 January 2024 ($m)
Cash $140 $140
Available credit facility $720 $525
Estimated distributions during the next 12 months $733 $627
Total sources $1,592 $1,292
Estimated investments over the next 36 months $1,364 $1,467
Medium-term Coverage Ratio 117% 88%
Commitment Coverage Ratio
(Short-term liquidity as a percentage of Total Investment Pipeline)
31 July 2024 ($m) 31 January 2024 ($m)
Cash $140 $140
Available credit facility $720 $525
Total sources $860 $665
Investment Pipeline $2,231 $2,501
Commitment Coverage Ratio 39% 27%
Disclosures
Investments
The companies represented within this report are provided for illustrative
purposes only, as example portfolio holdings. There are over 14,000 individual
companies in the HVPE portfolio, with no one company comprising more than 2.2%
of the entire portfolio.
The deal summaries, General Partners (managers), and/or companies shown within
the report are intended for illustrative purposes only. While they may
represent an actual investment or relationship in the HVPE portfolio, there is
no guarantee they will remain in the portfolio in the future.
Past performance is no guarantee of future returns.
Forward-looking Statements
This report contains certain forward-looking statements. Forward-looking
statements relate to expectations, beliefs, projections, future plans and
strategies, anticipated events or trends, and similar expressions concerning
matters that are not historical facts. In some cases, forward-looking
statements can be identified by terms such as "anticipate", "believe",
"could", "estimate", "expect", "intend", "may", "plan", "potential", "should",
"will", and "would", or the negative of those terms, or other comparable
terminology. The forward-looking statements are based on the Investment
Manager's and/or the Directors' beliefs, assumptions, and expectations of
future performance and market developments, taking into account all
information currently available. These beliefs, assumptions, and expectations
can change as a result of many possible events or factors, not all of which
are known or are within the Investment Manager's and/or the Directors'
control. If a change occurs, the Company's business, financial condition,
liquidity, and results of operations may vary materially from those expressed
in forward-looking statements.
By their nature, forward-looking statements involve known and unknown risks
and uncertainties because they relate to events, and depend on circumstances,
that may or may not occur in the future. Forward-looking statements are not
guarantees of future performance. Any forward-looking statements are only made
as at the date of this document, and the Investment Manager and/or the
Directors neither intends nor assumes any obligation to update forward-looking
statements set forth in this document whether as a result of new information,
future events, or otherwise, except as required by law or other applicable
regulation.
In light of these risks, uncertainties, and assumptions, the events described
by any such forward-looking statements might not occur. The Investment Manager
and/or the Directors qualifies any and all of its forward-looking statements
by these cautionary factors.
Please keep this cautionary note in mind while reading this report.
Some of the factors that could cause actual results to vary from those
expressed in forward-looking statements include, but are not limited to:
· the factors described in this report;
· the rate at which HVPE deploys its capital in investments and
achieves expected rates of return;
· HarbourVest's ability to execute its investment strategy,
including through the identification of a sufficient number of appropriate
investments;
· the ability of third-party managers of funds in which the
HarbourVest funds are invested and of funds in which the Company may invest
through parallel investments to execute their own strategies and achieve
intended returns;
· the continuation of the Investment Manager as manager of the
Company's investments, the continued affiliation with HarbourVest of its key
investment professionals, and the continued willingness of HarbourVest to
sponsor the formation of and capital raising by, and to manage, new private
equity funds;
· HVPE's financial condition and liquidity, including its ability
to access or obtain new sources of financing at attractive rates in order to
fund short-term liquidity needs in accordance with the investment strategy and
commitment policy;
· changes in the values of, or returns on, investments that the
Company makes;
· changes in financial markets, interest rates, or industry,
general economic, or political conditions; and
· the general volatility of the capital markets and the market
price of HVPE's shares.
Publication and Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets less its
total liabilities. The NAV per share is calculated by dividing the NAV of the
Company by the number of shares in issue. The Company intends to publish the
estimated NAV per share as calculated, monthly in arrears, as at each
month-end, generally within 20 days.
Regulatory Information
HVPE is required to comply with the UK Listing Rules, Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority in the United Kingdom
(the "LDGT Rules"). It is also authorised by the Guernsey Financial Services
Commission as an authorised closed-end investment scheme under the Protection
of Investors (Bailiwick of Guernsey) Law, 2020, as amended (the "POI Law").
HVPE is subject to certain ongoing requirements under the LDGT Rules and the
POI Law and certain rules promulgated thereunder relating to the disclosure of
certain information to investors, including the publication of annual and
half-yearly financial reports.
Valuation Policy
Valuations Represent Fair Value Under US GAAP
HVPE's 31 July 2024 NAV is based on the 30 June 2024 NAV of each HarbourVest
fund and Conversus, adjusted for changes in the value of public securities,
foreign currency, known material events, cash flows, and operating expenses
during July 2024. The valuation of each HarbourVest fund is presented on a
fair value basis in accordance with US generally accepted accounting
principles ("US GAAP"). See Note 4 in the Notes to the Financial Statements on
pages 41 to 42.
The Investment Manager typically obtains financial information from 90% or
more of the underlying investments for each of HVPE's HarbourVest funds to
calculate the NAV. For each fund, the accounting team reconciles investments,
distributions, and unrealised/realised gains and losses to the Financial
Statements. The team also reviews underlying partnership valuation policies.
Management of Foreign Currency Exposure
The Investment Portfolio includes two euro-denominated HarbourVest funds and a
Canadian dollar-denominated fund.
· 14% of underlying partnership holdings are denominated in euros.
The euro-denominated Investment Pipeline is €11.3 million.
· 3% of underlying partnership holdings are denominated in
sterling. There is no sterling-denominated Investment Pipeline.
· 1% of underlying partnership holdings are denominated in
Australian dollars. There is no Australian dollar-denominated Investment
Pipeline.
· 0.3% of underlying partnership holdings are denominated in
Canadian dollars. The Canadian dollar-denominated Investment Pipeline is C$5.9
million.
HVPE has exposure to foreign currency movement through foreign
currency-denominated assets within the Investment Portfolio and through its
Investment Pipeline of unfunded commitments, which are long term in nature.
The Company's most significant currency exposure is to euros. The Company does
not actively use derivatives or other products to hedge the currency exposure.
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AnnouncementREG - HarbourVest Global - Transaction in Own Shares
AnnouncementREG - HarbourVest Global - Transaction in Own Shares
AnnouncementREG - HarbourVest Global - Transaction in Own Shares
Announcement