New Hampshire commits $50m to Dover Street VIII

The $5.8bn retirement system is in discussions with HarbourVest Partners for a seat on Dover Street VIII’s advisory board.

The New Hampshire Retirement System’s investment committee approved a $50 million commitment to HarbourVest Partners’ Dover Street VIII fund last week, according to a retirement system spokesperson.

The $50 million commitment was well above the $30 million recommended by New Hampshire’s director of investments Lawrence Johansen. 

“After a discussion among the Committee members … it was agreed that given the complementary approach of HarbourVest to secondary investments, a $50 million commitment was most appropriate,” according to the spokesperson, who could not provide additional details at this time. 

Johansen cited HarbourVest’s “consistent track record of good absolute returns across eight prior funds” in his commitment recommendation, according to documents made available by the retirement system. NHRS is also in discussions with HarbourVest about a possible seat on Dover Street VIII’s advisory board, according to documents. 

HarbourVest had raised at least $2 billion for Dover Street VIII as of November, according to a source with knowledge of the fundraising. The fund is targeting $3 billion with a $4 billion hard-cap, according to documents. 

US Securities and Exchange Commission filings for the vehicle do not state a target. It is unclear whether the $4 billion cited by New Hampshire represents a hard-cap. HarbourVest did not respond to requests for comment.  

HarbourVest’s Dover Street funds traditionally target investments in existing limited partnership agreements as well as portfolios of direct investments – known as direct secondaries, according to University of Houston documents. 

“Direct secondaries have become an increasingly important portion of the Dover Street portfolios and the team expects such investments to comprise 40 [to] 50 [percent] of the DS VIII portfolio, which is consistent with DS VII,” according to University of Houston, which committed $4 million to the fund. “In the current environment, the team views direct secondaries as less competitive than traditional LP interest deals.”

The University of Houston documents reveal an average annual management fee of 0.81 percent and a 7 percent preferred return on Dover Street VIII. The fund’s carry rate is 12.5 percent. 

HarbourVest’s previous Dover Street fund, a $2.9 billion 2007 vintage, was generating a 1.3x multiple and 16 percent internal rate of return as of 30 June, according to Maryland State Pension and Retirement System documents.