HarbourVest completes $830m offering

Global fund of funds HarbourVest Partners has completed its first public offering, as it attracted $300 million of fresh investments, while $530 million of existing investors transferred their assets, despite problems in the worldwide markets.

HarbourVest Partners has completed an $830 million (€570 million) offering on Euronext Amsterdam at $10 per share.

US bank Lehman Brothers, as global co-ordinator, may purchase up to 2.5 million shares at $10 per share from existing HarbourVest limited partners to cover over-allotments.

The share price was trading at $10 per share at 1322 CET.

The offering is HarbourVest’s first public vehicle. The fund was made up of $300 million of fresh capital, $100 million below the original target. The remaining $530 million was raised from shares allocated to existing investors in the firm’s unquoted funds of funds.

These investors agreed to provide $680 million of assets, which including an allocation to HarbourVest’s latest fund of funds ensured the offering was 91 percent invested at launch, reducing the potential for cash drag, a common complaint of quoted private equity.

HarbourVest returned $150 million to these investors in cash, according to one of its managing directors George Anson. Of these funds around $110 million were reinvested.

The fund had targeted to raise $400 million of fresh capital from the public markets. Anson said that it had raised only $300 million did not matter because under the terms of the deal, the existing HarbourVest shareholders received shares in the vehicle to make up for any lack of public uptake as long as the fund of funds was able to raise $250 million.

Anson said: “We had $250 million two weeks ago and at that point we knew the deal was going to fly. There have been 26 initial public offerings withdrawn from the marketplace since the problems began. We believe our fundraising has been a little bit about creating our own luck with a quality product.”

The fund will invest in existing and future HarbourVest funds, which focus on primary partnership commitments, secondary investments or direct investments in operating companies.

Lehman Brothers, German bank Deutsche Bank’s London Branch and US bank Goldman Sachs acted as joint bookrunners.

Anson told PEO last month the fund will pursue an over-commitment strategy of around 129 percent to ensure “there is as little cash on the balance sheet as possible”.

To quell criticism of fee duplication, HarbourVest is not charging fees on the listed “fund of funds of funds” structure. Investors in the public vehicle will pay the same fees as investors in underlying fund partnerships.

The firm has put together a heavy-hitting board, including chairman Sir Michael Bunbury, an experienced director of listed and private investment, property and financial services companies, and French venture veteran Jean-Bernard Schmidt, managing partner of Sofinnova Partners.