HarbourVest: Distributions up, capital calls up even more

In a sign of the rapidly returning private equity deal market, the global firm’s listed fund of funds has had its busiest month ever.

HarbourVest Partners’ listed investment vehicle experienced a dramatic return to activity in its portfolio in December, with large increases in capital calls and realisations, the company said on Friday.

HarbourVest Global Private Equity, which is listed on both the London Stock Exchange and Amsterdam’s Euronext, met capital calls totalling $35 million during December from its funds of funds, a direct investment fund and its global secondaries fund. This compares with just $4.3 million in calls funded during November, or $9.2 million during December 2009.

You have to allow somewhat for seasonal adjustment, as a lot of deals will be rushed to completion before the end of the year, but this definitely represents a good sign of the returning market

Iain Scouller

The largest capital call came from Dover VII, the global secondaries fund behind the €177 million venture capital spin-out of Holtzbrinck Ventures from its parent, the German publishing group Verlagsgruppe Georg von Holtzbrinck.

The increased investment pace was almost matched by distributions received. 32 exits across the portfolio returned a total of $31.6 million to the HVPE. Six underlying companies completed IPOs during the month, including one for FleetCor Technologies, in which HVPE held a direct co-investment stake. By comparison, HVPE received $18.7 million in distributions during December 2009.

The capital call and distribution totals were the highest since HVPE’s inception, the company said in its trading update.

Steve Belgrad, chief financial officer of HVPE, said the activity levels for December were broadly on a par with those seen in during the highs of 2007.

“You are finally seeing the listed private equity fund functioning in the way it was intended, with distributions just outpacing capital calls,” Belgrad told PEO. “It feels like the industry has finally turned a corner.”

Iain Scouller, an analyst with Oriel Securities, said: “You have to allow somewhat for seasonal adjustment, as a lot of deals will be rushed to completion before the end of the year, but this definitely represents a good sign of the returning market.”

HVPE reported a 3.4 percent increase in net asset value during the month of December, which it attributed to both rising valuations and positive currency movements.