REG - HarbourVest Global - Initiatives to Maximise Returns & Narrow Discount

Harbourvest Global Private EquityAnnouncement

30/01/2025 07:00

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RNS Number : 1909V  HarbourVest Global Priv. Equity Ltd  30 January 2025

 

30 January 2025

 

This announcement contains information that qualifies or may qualify as inside
information under the UK Market Abuse Regulation and the EU Market Abuse
Regulation.

 

The person responsible for arranging the release of this announcement on
behalf of HarbourVest Global Private Equity Limited is Martin Bourgaize,
Company Secretary.

 

HARBOURVEST GLOBAL PRIVATE EQUITY LIMITED

("HVPE" or the "Company")

 

After extensive shareholder engagement, the Board of HVPE today announces the
introduction of three new initiatives aimed at maximising returns for
shareholders and addressing the discount to NAV

 

1.   Allocation to Distribution Pool to be doubled from 15% to 30% of
gross distributions

2.   Simplified investment structure agreed in principle going forward with
HarbourVest Partners

3.   Introduction of Continuation Vote at 2026 AGM

 

 

In 2024, HVPE's share price increased 12.5%, supported by accretion from $90
million of share buybacks. In sterling terms, over the last five years HVPE's
share price has outperformed the FTSE 250 Index (+40%), and over 10 years has
outperformed both the FTSE 250 Index (+165%) and FTSE All World Index Total
Return (+18%).

 

Over the course of 2024, the Board consulted extensively, listened to and
reflected on the views of a broad range of shareholders. The Board strongly
believes in the importance of funds such as HVPE in democratising private
equity ownership for all investors. The Board shares the frustrations of
shareholders regarding HVPE's current discount to NAV and has explored a range
of options to deliver improved share price returns.

 

The Company will provide a live presentation for shareholders via Investor
Meet Company at 3.00 p.m. on 4 February 2025. Investors will be able to
register to attend here:
https://www.investormeetcompany.com/harbourvest-global-private-equity-limited/register-investor.
The presentation is open to all existing and potential shareholders.

 

Positive impact of HVPE's Distribution Pool

 

On 1 February 2024, HVPE announced its 15% Distribution Pool to fund future
share buybacks or return capital to shareholders by means of special
dividends. Between 1 January and 31 December 2024, HVPE repurchased $90
million worth of shares, actively engaging in buybacks on 132 of the 254
trading days during the period. This is the second largest buyback by
percentage of NAV and the largest by absolute amount among any of HVPE's
direct peers.

 

During 2024, a 12.5% increase in HVPE's share price positioned the Company as
the second-best performer in the private equity Fund of Funds sector.

 

1. Enhanced Distribution Pool

 

The Board is strongly committed to delivering value for shareholders, and
believes that buybacks at the current discount to NAV are accretive and
represent an efficient use of shareholder capital. As such, the Board has
decided to double the allocation of cash realisations from HVPE's portfolio to
the Distribution Pool, increasing from 15% to 30%, which is expected to be
used for share buybacks.

 

Following the rebound in realisation activity that began in H2 2024, HVPE's
forecast for portfolio distributions in 2025 is $609 million, based on a
conservative assumption that just under 16% of current NAV will be realised.
At this level of portfolio distributions, shareholders would see a total of
$235 million potentially available for share buybacks in 2025, inclusive of
$183 million allocated to the Distribution Pool during the calendar year and
the existing balance of $52 million. The Board believes that the distributions
facilitated through the Pool will make a material difference to shareholders'
returns, ensuring they benefit more directly from the strong value growth
delivered by HVPE's high quality portfolio.

 

The Distribution Pool allocation will be reviewed annually, and the Board will
continue to monitor the situation closely to ensure that the best possible
outcomes are achieved for shareholders.

 

The updated distribution policy will take effect from 1 February 2025.

 

2. Simplified investment structure

 

The Board and Manager, HarbourVest Partners, are finalising a revised
arrangement whereby capital will be deployed by the Manager via a dedicated
HVPE vehicle directly into third party General Partner funds, secondary
opportunities and co-investments. This arrangement, typically referred to as a
Separately Managed Account (SMA), will simplify HVPE's investment structure
over time.

 

The benefits of an SMA would include greater flexibility in the deployment of
capital, an enhanced ability to allocate investments in line with approved
Strategic Asset Allocation targets, greater control over portfolio liquidity,
and a substantial reduction in embedded leverage.

 

The Board is engaging in discussions with the Manager on behalf of
shareholders to ensure that the best possible arrangement is secured and
expects to be able to share final details in the Annual Report in May 2025.

 

3. Continuation vote

 

As part of its ongoing commitment to best-in-class corporate governance, the
Board also confirms that it will introduce a Continuation Vote, which will be
put to shareholders at HVPE's Annual General Meeting in July 2026. This will
ensure shareholders have a platform to express their views and decide on the
future of the Company. The Board sees the introduction of a Continuation Vote
as an important milestone in promoting shareholder democracy, and acknowledges
that HVPE will be the first listed PE Fund of Funds investment company to take
this step.  Shareholders will be asked by simple majority vote if they wish
the Company to continue.

 

Corporate governance and communication

 

As part of its commitment to the highest standards of corporate governance,
over the past two years the independence of HVPE's Board has been transformed,
whilst maintaining a constructively robust relationship with the Manager.

 

The Board has introduced a number of other initiatives aimed at improving
HVPE's attractiveness to new investors, including overhauling the Company's
communications function over the past 12 months. The Board and the Manager
have held a significant number of meetings with investors and key
stakeholders, and an annual perception study has been carried out by an
independent third party. This has enabled the Board to build a thorough
understanding of investors' views and has provided reassurance of the broad
support and confidence of the Company's shareholders.

 

Outlook improving as the private equity sector rebounds

 

HVPE anticipates that 2025 will bring improved valuations and opportunities
for realisations in the private equity market. The alignment of buyer and
seller expectations, along with early signs of recovery in the M&A and IPO
markets, are expected to act as catalysts for unlocking greater value in the
sector. An increase in realisation activity should provide greater visibility
on portfolio valuations while generating significant cash flows. Additionally,
the Manager's positive outlook for venture capital, particularly for IPOs in
the venture space, should bode well for HVPE's exposure to this segment.

 

HVPE's portfolio saw an increase in exit activity in H2 2024, up 110% on H1.
With an annualised exit rate at 13% of NAV in H2, compared to the 10-year
average exit rate at 19% of NAV, the Board concludes there is further recovery
potential.

 

Ed Warner, Chair of HVPE, said:

 

"As a Board we are committed to maximising returns for all of our shareholders
and, despite our NAV growth outperforming the majority of our peers over the
course of the calendar year, HVPE's discount to NAV remains a key focus. We
understand and share our shareholders' concerns, and believe the three
measures announced today will maximise returns, help to address the discount,
improve flexibility and give shareholders greater control over their
investment.

 

"The Board is excited by HarbourVest's confidence in the outlook for private
markets, and believes that the larger Distribution Pool, accompanied by the
green shoots of recovery in the private equity market, positions HVPE and its
shareholders to benefit from improved valuations and realisation opportunities
in the sector.

 

"I would like to personally thank all of our shareholders for their support
during what has been a challenging period. We expect HVPE's high quality
portfolio to continue to outperform public market benchmarks over the longer
term and we are firm believers in the opportunity HVPE offers shareholders for
superior returns."

 

The HVPE team is here to discuss any questions you may have, so please do not
hesitate to contact Richard Hickman or Stephanie Hocking using the contact
details below.

 

- ENDS -

 

LEI: 213800NBWV6WWV8TOL46

 

Enquiries:

 Shareholders
 HarbourVest Partners
 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)

 Peel Hunt (Joint Broker)
 Luke Simpson /                                Tel: +44 (0)20 7418 8900          luke.simpson@peelhunt.com (mailto:shocking@harbourvest.com)
 Huw Jeremy (Investment Banking)                                                 huw.jeremy@peelhunt.com
 Alex Howe /                                                                     alex.howe@peelhunt.com
 Ed Welsby (Sales)                                                               ed.welsby@peelhunt.com

 Winterflood Investment Trusts (Joint Broker)
 Neil Morgan /                                 Tel: +44 (0) 20 3100 0000         neil.morgan@winterflood.com
 Joe Winkley (Corporate Finance)                                                 joe.winkley@winterflood.com
 Hugh Middleton                                                                  hugh.middleton@winterflood.com
 Darren Willis (Sales)                                                           darren.willis@winterflood.com

 Media

 MHP

 James McFarlane /                             Tel: +44 7854 142 665             HVPE@mhpgroup.com (mailto:HVPE@mhpgroup.com)
 Mathew Taylor                                 Tel: +44 7827 662 831

 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
Harbour Vest-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 42 years of
experience and more than $138 billion of assets under management as of
September 30, 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 240
investment professionals across Asia, Europe, and the Americas. Across our
private market's platform, our team has committed more than $61 billion to
newly-formed funds, completed over $59 billion in secondary purchases, and
invested over $43 billion in directly operating companies. We partner
strategically and plan our offerings innovatively to provide our clients with
access, insight, and global opportunities.

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