HarbourVest Global Private Equity, a listed investment company managed by HarbourVest Partners, plans to move its listing from the Specialist Fund Market to the main market of the London Stock Exchange.
The reason for the move, which is expected to take place in early September, is to broaden HVPE’s investor base as well as improving discount to net asset value, Richard Hickman, an associate director portfolio development at HarbourVest told Private Equity International.
“Retail investors and smaller wealth managers don’t necessarily pay much attention to the Specialist Fund Market because it is targeted at the institutions that are really high profile professional investors,” Hickman said. “We obviously want those [investors] to remain on board and that is still our core shareholding but the main market will allow us to offer access to private equity to the retail investor as well.”
HVPE also aims to narrow its discount to net asset value by moving to the main market, Hickman said. “We trade at a discount to NAV – which is approximately 14 percent — but it varies. We are hoping that with smaller family offices and retail investors it will improve the daily liquidity in the stock which will help the accuracy of the pricing and will narrow the discount to NAV.”
There are “no immediate plans” to issue new shares following the move, Hickman added, although it may be a consideration in the future. “If we start to trade closer to NAV, it will become easier to issue new shares and to expand the vehicle,” he said.
In order to clear the way for a main market listing, HVPE needed to ensure that US share ownership was below 50 percent. “We tried to build demand in the UK and continental Europe and arranged for US sellers to sell into a strong market where there were plenty of investors and institutions that wanted to pick up the shares. The vehicle started off as two-thirds US [shareholders] and we got that down by to under 50 percent,” Hickman said.
HarbourVest negotiated with US investors to sell part of their shares. “We tried to cooperate with them and said that if we get to the main market, hopefully the discount will close so hopefully the rest of your holding will appreciate more than it would otherwise.”
Given the size of the company, HVPE would qualify to be included in the FTSE250, Hickman said, although this will also partly depend on the level of liquidity HVPE can provide. HVPE, which is also listed on the Euronext Amsterdam exchange, will continue to be listed there following the move.
HVPE currently gives investors exposure to 723 private equity funds and partnerships, giving investors having exposure to 6,377 companies.