HVPE to pay out $40m as NAV jumps 9%

HarbourVest’s listed vehicle is to distribute more cash to shareholders in the next two years, after a 12-month period in which its share price jumped by over a third.

HarbourVest Global Private Equity, the London- and Amsterdam-listed arm of fund of funds HarbourVest Partners, said that its NAV increased by 9 percent in the 12 months to 31 January 2013, from $944 million to $1.03 billion. 

This helped to boost its share price, which jumped 36 percent over the period to $8.66. It has since continued to rise: at press time, HVPE shares were trading at $9.65.

HVPE also recorded 11 months of positive cash flows from its portfolio during the year, helping the firm cash in a net $4 million over the period. This  was underpinned by $203 million in realisations received from its own funds and those of Absolute Private Equity, a listed fund of funds it bought in 2011. 

Investments for the year totalled $199 million – comprising $105 million deployed in HarbourVest funds and $94 million invested in assets formerly owned by Conversus, a vehicle it acquired in July 2012. 

“It’s important we continue to invest,” Stuart Howards, COO of European listed products at HarbourVest, told Private Equity International. “Too many firms are not investing, but that doesn’t really put much money in the ground for future growth.”

HVPE completed the purchase of Conversus’ assets in December, adding to its direct stake of $94 million with a $12 million indirect interest through commitments to funds it manages. The deal generated a $20 million gain for HarbourVest’s portfolio during the financial year, the firm said. 

“Sharing in the profits of Absolute and Conversus, almost as a reward for the gearing risk, is good. It shows our confidence in making profitable deals and transactions of that size,” Howard commented. 

As part of a strategic review, the group announced its intention to distribute up to $40 million in cash to investors over the next two years, based on expected profits from its investments in Absolute and Conversus. It is also looking at ways to improve its governance and listing structure, to address shareholder reservations about its current dual listing, Howard said. 

The group, which will embark on investor roadshows in the coming months, hopes that the positive results will persuade a greater number of institutional investors to start buying and selling HVPE shares – thereby increasing their liquidity and, potentially, reducing the discount to NAV, which currently stands at 23 percent.