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/. 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
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 by the close of business today.
- ENDS -
LEI: 213800NBWV6WWV8TOL46
Enquiries:
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Shareholders |
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Richard Hickman |
Tel: +44 (0)20 7399 9847 |
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Stephanie Hocking |
Tel: +44 (0)20 7399 9834 |
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MHP |
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Tim Rowntree / Robert Collett-Creedy |
Tel: +44 7890 952 661 Tel: +44 7736 464 749 |
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Media HarbourVest Partners |
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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 year1, 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 year2, 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 EMEIA1 regions recorded double digit year-over-year growth in IPO activity2, 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 below3 ).
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-Investments4 (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.
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Fund Movement5 |
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NAV per Share at 31 January 2024 |
$50.47 |
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Co-Investment V |
+$0.20 |
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Fund XI Buyout |
+$0.17 |
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Asia Pacific V |
+$0.15 |
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Co-Investment VI |
+$0.12 |
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Fund XII Buyout |
+$0.10 |
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Other HarbourVest Funds6 |
+$0.86 |
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Management Fees7 |
-$0.15 |
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Performance Fees8 |
-$0.08 |
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Net Operating Expenses9 |
-$0.26 |
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Foreign Currency |
+$0.00 |
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Share Buybacks |
+$0.40 |
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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
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HarbourVest Fund Name |
Vintage Year |
Description |
Called amount |
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Asia Pacific V |
2021 |
Asia Pacific-focused multi-strategy fund of funds |
$65m |
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Fund XII Buyout |
2021 |
US-focused Buyout fund of funds |
$37m |
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HIPEP IX |
2020 |
International multi-strategy fund of funds |
$29m |
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Fund XI Buyout |
2018 |
US-focused Buyout fund of funds |
$28m |
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Co-Investment VI |
2021 |
Global Direct Co-investment fund |
$19m |
Top Five HarbourVest Fund Distributions
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HarbourVest Fund Name |
Vintage Year |
Description |
Distributed amount |
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Co-Investment V |
2018 |
Global Direct Co-investment fund |
$15m |
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HIPEP VII Partnership Fund |
2014 |
International multi-strategy fund of funds |
$9m |
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Global Annual Fund |
2014 |
Global multi-strategy fund of funds |
$9m |
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Fund IX Buyout |
2011 |
US-focused Buyout fund of funds |
$8m |
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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.
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Top Five M&A transactions (by contribution to HVPE NAV per share11)
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Top IPOs (by contribution to HVPE NAV per share)
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 ICVCM12 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.
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 202413
|
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.
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 Ratios1
The Board and the Investment Manager refer to three key ratios when assessing the Company's commitment levels:
|
1. Total Commitment Ratio ("TCR") The level of the TCR is a key determinant of the Company's total commitment capacity for new HarbourVest funds and Co-investments within a given time period. This ratio fell slightly to 165% at 31 July 2024, as described on page 17 of the KPIs section. |
(Total exposure to private markets investments as a percentage of NAV)
|
||||||
|
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)
|
||||||
|
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)
|
||||||
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.
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 Conversus1 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 to 31 July 2024 |
12 months to 31 January 2024 |
Six months to 31 July 2023 |
|
Operating expenses2 |
0.57% |
0.72% |
0.29% |
|
HarbourVest fund operating expenses3 |
0.08% |
0.22% |
0.09% |
|
Management fees4 |
0.30% |
0.60% |
0.29% |
|
Operating expense ratio |
0.95% |
1.54% |
0.67% |
|
Interest income5 |
(0.07)% |
(0.23)% |
(0.13)% |
|
Net operating expense ratio |
0.88% |
1.31% |
0.54% |
|
Performance fees6 |
0.14% |
0.48% |
0.28% |
|
Total net expense ratio7 |
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 (Unaudited) (in thousands*) |
|
31 January 2024 (Audited) (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 and outstanding at 31 July and 31 January 2024 respectively, no par value |
|
3,962,589 |
|
3,920,572 |
|
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 (unaudited) (in thousands) |
|
31 July 2023 (unaudited) (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 (unaudited) (in thousands) |
|
31 July 2023 (unaudited) (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 (unaudited) (in thousands) |
|
31 July 2023 (unaudited) (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. |
|
2,000 |
|
48,202 |
|
62,811 |
|
699 |
|
0.0 |
|
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 |
|
84,525 |
|
30,550 |
|
378 |
|
35,321 |
|
0.9 |
|
Harbourvest Infrastructure Income Delaware Parallel Partnership |
|
- |
|
117,233 |
|
38,628 |
|
105,296 |
|
2.7 |
|
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 Fund II L.P. |
|
1,500 |
|
48,500 |
|
11,372 |
|
50,166 |
|
1.3 |
|
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. |
|
62,500 |
|
37,500 |
|
1,185 |
|
48,115 |
|
1.2 |
|
Dover Street XI Feeder Fund L.P. |
|
202,500 |
|
47,500 |
|
- |
|
65,589 |
|
1.7 |
|
HarbourVest Credit Opportunities III Feeder Fund L.P. |
|
75,000 |
|
- |
|
- |
|
464 |
|
0.0 |
|
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. |
|
2,000 |
|
48,202 |
|
62,811 |
|
699 |
|
0.0 |
|
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 |
|
95,450 |
|
19,625 |
|
- |
|
23,431 |
|
0.6 |
|
Harbourvest Infrastructure Income Delaware Parallel Partnership |
|
- |
|
117,233 |
|
37,964 |
|
104,241 |
|
2.7 |
|
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 Fund II L.P. |
|
1,500 |
|
48,500 |
|
8,939 |
|
49,891 |
|
1.3 |
|
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. |
|
71,000 |
|
29,000 |
|
1,185 |
|
36,161 |
|
0.9 |
|
Dover Street XI Feeder Fund L.P. |
|
207,500 |
|
42,500 |
|
- |
|
57,126 |
|
1.5 |
|
HarbourVest Credit Opportunities III Feeder Fund L.P. |
|
75,000 |
|
- |
|
- |
|
(63) |
|
0.0 |
|
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 (unaudited) (in thousands) |
|
2023 (unaudited) (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 (Unaudited) |
|
2023 (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 Measures1
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 |
$51.98 |
|
US dollar total return |
239% |
|
FTSE AW TR (US dollar) |
|
|
31 July 2014 |
334.36 |
|
31 July 2024 |
816.86 |
|
FTSE AW TR total return |
144% |
|
|
|
|
10-year outperformance of FTSE AW TR calculation |
|
|
239% minus 144% |
94pp |
Total Shareholder Return (£)
|
Date |
Share Price (£) |
Period-on-period Change |
|
31 January 2019 |
£14.26 |
|
|
31 January 2020 |
£18.36 |
+28.8% |
|
31 January 2021 |
£18.70 |
+1.9% |
|
31 January 2022 |
£27.75 |
+48.4% |
|
31 January 2023 |
£22.10 |
-20.4% |
|
31 January 2024 |
£23.15 |
+4.8% |
|
31 July 2024 |
£26.10 |
+12.7% |
12-month relative performance (July to July)
|
Date |
Share Price (£) |
Period-on-period Change |
|
31 July 2020 |
£15.28 |
|
|
31 July 2021 |
£22.50 |
+47.3% |
|
31 July 2022 |
£24.10 |
+7.1% |
|
31 July 2023 |
£22.50 |
-6.6% |
|
31 July 2024 |
£26.10 |
+16.0% |
Total Commitment Ratio
(Total exposure to private markets investments as a percentage of NAV)
|
|
31 July 2024 ($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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