HarbourVest Partners has joined forces with a Dubai-based private equity firm as it looks to build up its secondaries activity in the MENA region.
HarbourVest has entered into a partnership with Lagoon Capital, a firm backed by Qatar Insurance Company. The two groups said they would jointly source, evaluate and invest in private equity assets held by investors in the area.
This could include acquisitions of LP commitments in private equity funds, portfolios of direct investments, spin-outs from existing platforms and supporting the restructuring of underperforming funds, according to a statement.
Dover Street VIII, a $3.6 billion vehicle that HarbourVest raised in 2011, will be the “primary source of funds for these initiatives” the statement said.
Due to financial, strategic or regulatory considerations, many investors need to reposition their portfolios or exit positions entirely, Lagoon’s chief executive officer Anuj Khanna said in a statement. However, exits have been challenging due to the lack of development of a secondary market in the region, he added.
“Our focus is to provide discrete and comprehensive liquidity solutions to our counterparties for their regional and global assets, and help the natural and necessary evolution of the secondary market, which will in turn strengthen the appeal of private equity in the region as an asset class,” he said.
Lagoon Capital has plans to raise a fund in future but currently does not have its own investment vehicle. “That’s why the partnership with HarbourVest works for us on multiple fronts,” Khanna told Private Equity International. “It’s an immediate source of capital, [HarbourVest has] the technical expertise on valuing global assets and we bring the regional access and relationships as well as the ability to oversee these regional assets.”
This sourcing partnership works well for both parties, Peter Wilson, a managing director at Lagoon told PEI. “Lagoon are based in the region and will come across situations with Middle Eastern sellers of private equity fund interest or private company interests that we may be interested in acquiring.”
HarbourVest is “keen to bring its secondary expertise to the MENA region”, David Atterbury, a managing partner at the firm, said in the statement. “As has been the case in the US and Europe, secondary market activity has played a critical role in the growth of private equity through the market cycles.”