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HarbourVest lists on LSE main market

HVPE, a listed fund of funds that invests in and alongside HarbourVest-managed funds, has moved from the Specialist Fund Market to the main board.

HarbourVest Global Private Equity (HVPE) has transitioned from the Specialist Fund Market to the main market of the London Stock Exchange.

Shares began trading Wednesday. HVPE’s market quote on the LSE has been redenominated into sterling. This makes the company eligible for inclusion in the FTSE All Share index, which would open its shares to index tracker funds.

HVPE’s listing on Euronext Amsterdam is not affected, and the company’s functional currency will remain the US dollar, according to a company statement.

As well as increasing liquidity in its share trading and narrowing the discount between its net asset value – $16.29 at 31 July – and its share price, the aim of the move is to broaden the appeal of HVPE stock and improve its ability to market its shares to retail investors.

Speaking after the listing, HVPE chairman Sir Michael Bunbury called the listing a “new and exciting chapter” for the firm, opening the investment company up to “people of more modest means who want to have an exposure to private equity”.

Retail investors are playing an increasingly key role in the private equity landscape. According to Palico research, in the last five years family offices and high net worth individuals with more than $10 million to invest increased their average private equity allocation from 19 percent to 29 percent of their own portfolio assets, as reported by Private Equity International.

“We want to normalise our position within our peers, most of which are main market-listed. We’ll be more level with the likes of Pantheon and more attractive to retail investors,” HVPE associate director Richard Hickman told PEI in July.

There are no immediate plans to raise capital following the move, Hickman said Wednesday.

Following the move, Andrea Lowe, CEO of LPEQ, the association of listed private equity firms, told PEI that as well as helping the liquidity of HVPE shares, listing on the main market will provide a boost to the listed private equity sector more broadly.

“HarbourVest is a very highly-regarded global private equity manager. This makes their shares available to an even wider group of investors, and raises the profile of accessing private equity through listed vehicles in the UK and beyond,” Lowe said.

“There are a number of institutions that have no private equity investment at all, including some UK pension funds. [Investing in listed private equity vehicles] would be a very good way for them to get to know the asset class, still have liquidity, and [it’s] much more administratively simple than having to manage the cash flows that you would do as a limited partner.”

Following an IPO on Euronext Amsterdam in 2007, HVPE listed on the London-based Specialist Fund Market in 2010. Moving to the main index required the firm to reduce its US shareholding to less than 50 percent, which it achieved earlier this year. This was the biggest hurdle the company had to overcome, Bunbury said.

HVPE invests in and alongside HarbourVest-managed funds in primary, secondary and direct co-investments. HVPE takes a stake of at least 5 percent and no more than 35 percent in each HarbourVest fund, Hickman said.

As at 31 July primary commitments accounted for 49 percent of HVPE’s portfolio, secondary commitments accounted for 36 percent and direct investments made up 15 percent. The long-term aim is to increase primary commitments to 60 percent and decrease secondary exposure to 25 percent, Hickman told PEI.

HVPE also intends to increase its exposure to Europe in the long-term. Currently the company has 66 percent of its portfolio in the US and 19 percent in Europe, but intends to move this toward 25 percent in Europe and 60 percent in the US.

HVPE holds $136 million of cash on its balance sheet and an available credit facility of $300 million. As at 31 July it has an investment pipeline of $948 million of unfunded commitments.