REG - HarbourVest Global - Update on shareholder distribution policy

Harbourvest Global Private EquityAnnouncement

01/02/2024 07:00

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RNS Number : 6059B  HarbourVest Global Priv. Equity Ltd  01 February 2024

 

 

 

1 February 2024

 

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 Jasper
Cross, Company Secretary.

 

HARBOURVEST GLOBAL PRIVATE EQUITY LIMITED

 

("HVPE" or the "Company")

 

Update on shareholder distribution policy and capital allocation

 

·    Launch of new Distribution Pool to fund future share buybacks or
return capital to shareholders by means of special dividends

·    New shareholder distribution policy will free up materially more cash
for shareholders to bolster their returns through the cycle

·    The Distribution Pool will be funded from cash realisations, with 15%
of the total to be allocated going forward

·    New commitments will be sized to preserve balance sheet strength and
liquidity

 

HVPE, a FTSE 250 investment company with global exposure to private companies,
managed by HarbourVest Partners, today announces a new shareholder
distribution policy as part of its broader capital allocation approach. The
Board and Investment Manager believe that this new policy will help to
optimise total shareholder returns through the cycle by ring-fencing capital
to be returned to shareholders.

 

Background

 

HVPE'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. The Investment Manager aims to
deliver material outperformance of the public markets through the cycle. In
the ten years to 31 December 2023, HVPE delivered growth in net asset value
("NAV") per share of 261%, while the FTSE All World Total Return Index
returned 127% (all USD). However, the full benefit of this outperformance has
not been reflected in the Company's share price, which has traded at a
significant discount to NAV for an extended period.

 

The Board appreciates this has been a challenging time and as a result will be
launching a new distribution policy to help bolster returns for shareholders.
The Company's first buyback programme was initiated in September 2022 and
since then HVPE has repurchased approximately $57 million worth of shares,
with a further $12 million of cash allocated for repurchases under the current
programme. In total, these buybacks resulted in NAV per share accretion of
1.3%.

 

Further to the announcement of 26 October 2023, the Board has engaged with a
large number of shareholders and other stakeholders to explore ways to allow
shareholders to participate more directly in NAV growth, including the
possibility of distributing on a regular basis some of the proceeds generated
by natural cash realisations in HVPE's portfolio. During these discussions,
the Board noted a range of views, with some support for the introduction of a
dividend. On balance, shareholders have expressed a preference for share
buybacks over dividends at the current level of discount, in view of the
potential benefit arising from the resulting NAV per share accretion for
continuing shareholders.

 

Launch of distribution pool for share buybacks or special dividends

 

The Board has reviewed several options in response to shareholder feedback,
taking into account the important considerations of preserving balance sheet
strength and managing liquidity risk. As a result, the Board has decided to
introduce a new distribution policy and to establish a distribution pool (the
"Distribution Pool"). The Distribution Pool will be funded by a proportion of
the cash realisations from the Company's portfolio going forward, with this
proportion set initially at 15%.

 

The Distribution Pool will accumulate on a rolling basis, up to a maximum
balance set by the Board. The Distribution Pool will be deployed for share
buybacks and/or special dividends at the sole discretion of the Independent
HVPE Board Directors (the "Distribution Group"). When determining the timing,
amount and nature of a shareholder distribution, the Distribution Group will
consider the macroeconomic environment, the discount to NAV at which HVPE's
shares are trading (both in absolute terms and relative to peers), market
sentiment, and the relative merits of distributing capital against the
potential benefit of committing to new investment opportunities.

 

By way of illustration, at times when the discount is deemed especially wide,
the Distribution Group may elect to distribute the cash in the form of share
buybacks. Alternatively, a special dividend may be the preferred option.
Equally, the Distribution Group may choose to retain the Distribution Pool for
an extended period to preserve capacity ahead of a future downturn, or
allocate some of the cash for reinvestment. If the balance in the Distribution
Pool reaches the maximum, the ongoing 15% allocation from portfolio
distributions will be diverted to new investment until such time as the
balance falls below the maximum, at which point the 15% allocation will once
again be used to replenish the Distribution Pool.

 

In establishing this new distribution policy, the Board's intention is to
optimise the long-term total return for shareholders through the cycle while
preserving the strength of the balance sheet.

 

In 2023, total commitments were reduced considerably from the original plan,
ending the year at $295 million, in response to the low level of portfolio
exit activity during the year. The Investment Manager has presented a plan for
2024, approved by the Board, based on a prudent level of new commitments with
a view to enhancing near-term cash flow. Furthermore, a specific proposed
commitment by HVPE has been placed on hold, thereby releasing a material cash
sum as an additional, near-term allocation to the Distribution Pool. We expect
that the total amount of cash allocated to the Distribution Pool in 2024 will
be materially greater than the amount distributed via buybacks since September
2022. For reference, total proceeds received from cash realisations in the
portfolio averaged $568 million per annum over the last three calendar years.

 

It is the Board's intention that the new distribution policy will take effect
from 1(st) February 2024. Any unspent cash allocated to share buybacks under
the current programme will be rolled into the Distribution Pool on that date.

 

The Distribution Pool will not take the form of a segregated cash account.
Rather, in the interests of balance sheet efficiency, the Distribution Pool
will be held as part of HVPE's total liquid resources and tracked from month
to month.

 

Ed Warner, Chair of HVPE, commented:

"We have engaged actively with shareholders in recent months and are grateful
for their feedback. I have personally spoken to a number of our shareholders
and I share the concern many have with the wide discount at which the shares
have traded over an extended period of time.

 

The Board have listened carefully and today we are pleased to announce a new
distribution policy. This will make available substantial funds for deployment
by the Board for the direct benefit of shareholders, with the clear aim of
optimising shareholder returns through the cycle while preserving balance
sheet strength.

 

We believe that this new, more flexible policy, including the potential to pay
dividends for the first time since HVPE was created, will make a significant
difference to shareholders. It will help ensure that they benefit more
directly from the strong value growth delivered by HVPE's high quality
portfolio, which has consistently outperformed public market benchmarks over
the long term."

 

- ENDS -

LEI: 213800NBWV6WWV8TOL46

 

Enquiries:

 Shareholders
 Richard Hickman         Tel: +44 (0)20 7399 9847    rhickman@harbourvest.com (mailto:rhickman@harbourvest.com)

 Media
 HarbourVest Partners
 Lily Cabianca           Tel: +44 (0)20 7151 4261    lcabianca@harbourvest.com (mailto:lcabianca@harbourvest.com)

 MHP
 Charlie Barker /        Tel: +44 7834 623 818       HVPE@mhpgroup.com (mailto:HVPE@mhpgroup.com)

 Robert Collett-Creedy

 

 

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
40 years of experience.

 

About HarbourVest Partners, LLC:

HarbourVest is an independent, global private markets firm with 40 years of
experience and more than $117 billion of assets under management as of
September 30, 2023. 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 1,000 employees, including more than 200
investment professionals across Asia, Europe, and the Americas. Across our
private markets platform, our team has committed more than $58 billion to
newly-formed funds, completed over $50 billion in secondary purchases, and
invested over $37 billion in directly 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.

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