TIDMHVPE
RNS Number : 7698Q
HarbourVest Global Priv. Equity Ltd
23 October 2019
23 October 2019
RESULTS FOR THE SIX MONTHSED 31 JULY 2019
Another period of strong performance
HarbourVest Global Private Equity Limited ("HVPE" or the
"Company"), today announces its unaudited results for the
six-months ended 31 July 2019. All figures relate to the half-year
ended 31 July 2019 and are presented in US dollars unless otherwise
stated.
Continued NAV per share and share price growth
-- Growth in net asset value ("NAV") per share of 7.1% over
six-month period to $25.80 from $24.09 at 31 January 2019
o 15.5% in sterling terms
-- NAV per share return of 12.5% against FTSE All World total
return of 3.3% over 12 months to 31 July 2019
-- Share price up 20.6% to GBP17.20 at half-year end
Net investor during period, with focus on real assets
-- $202.4m invested, $138.9m in distributions received
o $101.3m drawn down by the HVPE-seeded real assets vehicle as
it completed its first deal
o Distributions dominated by venture-backed liquidity events, in
line with wider market trends
Active portfolio and balance sheet management
-- $315.0m committed across six HarbourVest funds (six months to 31 July 2018: $355.0m)
-- Strong balance sheet, with net cash of $87.2m and undrawn
$600.0m credit facility, with initial term to 2026
Board strengthened with two new appointments
-- HarbourVest Partners, LLC Managing Director Carolina Espinal
appointed as a Non-Executive Director
-- Edmond Warner appointed as Independent Non-Executive Director
o Following a period of handover, it is anticipated that Mr
Warner will be appointed by the Board as Chairman in July 2020.
Sir Michael Bunbury, Chairman of HVPE, said: "We have continued
to make excellent progress over the last six months, with this
being reflected in both the growth of NAV per share, and the share
price.
"The Company continues to commit considerable resource and
effort to further the market's knowledge of HVPE and its
performance, in order to stabilise the discount at a level
significantly lower than it has been in the past.
"In the face of global political uncertainty, the Company's
Investment Manager, HarbourVest Partners, with over 36 years of
experience of investing in private markets behind them, and the
Board will strive to continue to drive forward the long-term growth
of the Company for the benefit of all shareholders."
To view the Company's Semi-Annual Report and Accounts please
follow this link: Semi-Annual Report - Six Months to 31 July 2019.
Page number references in this announcement refer to pages in this
report.
The Semi-Annual Report and Accounts will also shortly be
available on the National Storage Mechanism, which is situated at
www.morningstar.co.uk/uk/nsm.
Enquiries:
HVPE
Richard Hickman Tel: +44 (0)20 7399 rhickman@harbourvest.com
9847
Charlotte Edgar Tel: +44 (0)20 7399 cedgar@harbourvest.com
9826
HarbourVest Partners
Alicia Sweeney Tel: +1 (617) 807 acurransweeney@harbourvest.com
2945
MHP Communications
Charlie Barker / Tel: +44(0)20 3128 hvpe@mhpc.com
Tim Rowntree / Pete 8570
Lambie
Notes to Editors:
About HarbourVest Global Private Equity Limited:
HarbourVest Global Private Equity Limited ("HVPE" or the
"Company") is a Guernsey-incorporated, closed-end investment
company which is listed on the Main Market of the London Stock
Exchange and is a constituent of the FTSE 250 index. HVPE is
designed to offer shareholders long-term capital appreciation by
investing in a private equity portfolio diversified by geography,
stage of investment, vintage year, and industry. The Company
invests in and alongside HarbourVest-managed funds which focus on
primary fund commitments, secondary investments and direct
co-investments in operating companies. HVPE's investment manager is
HarbourVest Advisers L.P., an affiliate of HarbourVest Partners,
LLC, an independent, global private markets asset manager with more
than 35 years of experience.
About HarbourVest Partners, LLC:
HarbourVest is an independent, global private markets asset
manager with 36 years of experience and more than $64 billion in
assets under management. The Firm's powerful global platform offers
clients investment opportunities through primary fund investments,
secondary investments, and direct co-investments in commingled
funds or separately managed accounts. HarbourVest has more than 500
employees, including more than 125 investment professionals across
Asia, Europe, and the Americas. This global team has committed more
than $37 billion to newly-formed funds, completed over $21 billion
in secondary purchases, and invested over $11 billion directly in
operating companies. Partnering with HarbourVest, clients have
access to customised solutions, longstanding relationships,
actionable insights, and proven results.
This announcement is for information purposes only and does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase or subscribe for, any
securities in any jurisdiction and should not be relied upon in
connection with any decision to subscribe for or acquire any
Shares. In particular, this announcement does not constitute or
form part of any offer to issue or sell, or the solicitation of an
offer to acquire, purchase or subscribe for, any securities in the
United States or to US Persons (as defined in Regulation S under
the US Securities Act of 1933, as amended ("US Persons")). Neither
this announcement nor any copy of it may be taken, released,
published or distributed, directly or indirectly to US Persons or
in or into the United States (including its territories and
possessions), Canada, Australia or Japan, or any jurisdiction where
such action would be unlawful. Accordingly, recipients represent
that they are able to receive this announcement without
contravention of any applicable legal or regulatory restrictions in
the jurisdiction in which they reside or conduct business. No
recipient may distribute, or make available, this announcement
(directly or indirectly) to any other person. Recipients of this
announcement should inform themselves about and observe any
applicable legal requirements in their jurisdictions.
The Shares have not been and will not be registered under the US
Securities Act of 1933, as amended (the "Securities Act") or with
any securities regulatory authority of any state or other
jurisdiction of the United States and, accordingly, may not be
offered, sold, resold, transferred, delivered or distributed,
directly or indirectly, within the United States or to US Persons.
In addition, the Company is not registered under the US Investment
Company Act of 1940, as amended (the "Investment Company Act") and
shareholders of the Company will not have the protections of that
act. There will be no public offer of the Shares in the United
States or to US Persons.
This announcement has been prepared by the Company and its
investment manager, HarbourVest Advisers L.P. (the "Investment
Manager"). No liability whatsoever (whether in negligence or
otherwise) arising directly or indirectly from the use of this
announcement is accepted and no representation, warranty or
undertaking, express or implied, is or will be made by the Company,
the Investment Manager or any of their respective directors,
officers, employees, advisers, representatives or other agents
("Agents") for any information or any of the opinions contained
herein or for any errors, omissions or misstatements. None of the
Investment Manager nor any of their respective Agents makes or has
been authorised to make any representation or warranties (express
or implied) in relation to the Company or as to the truth, accuracy
or completeness of this announcement, or any other written or oral
statement provided. In particular, no representation or warranty is
given as to the achievement or reasonableness of, and no reliance
should be placed on any projections, targets, estimates or
forecasts contained in this announcement and nothing in this
announcement is or should be relied on as a promise or
representation as to the future.
Other than as required by applicable laws, the Company gives no
undertaking to update this announcement or any additional
information, or to correct any inaccuracies in it which may become
apparent and the distribution of this announcement. The information
contained in this announcement is given at the date of its
publication and is subject to updating, revision and amendment. The
contents of this announcement have not been approved by any
competent regulatory or supervisory authority.
This announcement includes statements that are, or may be deemed
to be, "forward looking statements". These forward looking
statements can be identified by the use of forward looking
terminology, including the terms "believes", "projects",
"estimates", "anticipates", "expects", "intends", "plans", "goal",
"target", "aim", "may", "will", "would", "could", "should" or
"continue" or, in each case, their negative or other variations or
comparable terminology. These forward looking statements include
all matters that are not historical facts and include statements
regarding the intentions, beliefs or current expectations of the
Company. By their nature, forward looking statements involve risks
and uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future and may be
beyond the Company's ability to control or predict. Forward looking
statements are not guarantees of future performance. More detailed
information on the potential factors which could affect the
financial results of the Company is contained in the Company's
public filings and reports.
All investments are subject to risk. Past performance is no
guarantee of future returns. Prospective investors are advised to
seek expert legal, financial, tax and other professional advice
before making any investment decision. The value of investments may
fluctuate. Results achieved in the past are no guarantee of future
results.
This announcement is issued by the Company, whose registered
address is BNP Paribas House, St Julian's Avenue, St Peter Port,
Guernsey, GY1 1WA
(c) 2019 HarbourVest Global Private Equity Limited. All rights
reserved.
Chairman's Statement
Dear Shareholder,
Your Company made excellent progress over the six months to 31
July 2019. Considerable detail is set out in the Investment
Manager's Report which follows this statement and I will
concentrate on highlighting some of the points in that report as
well as reporting on corporate matters and commenting on the
political and business environment in which the Company
operates.
Performance and NAV per Share
The Company's functional currency is the US dollar. At 31 July
2019, 79% of the underlying funds in which the Company is invested
are denominated in US dollars and the majority of underlying assets
are located in the US. Thus, it is the US dollar NAV per share that
the Board and Investment Manager focus on in relation to
performance. During the six months to 31 July, the NAV per share
increased by 7.1% to $25.80. Having outperformed the Company's
benchmark, the FTSE AW TR Index by 19.4% in the year to 31 January
2019, the substantial rise in many world stock markets over the six
months to 31 July meant that the Company underperformed over that
short period by 1.2%. Nevertheless, for the period since the
original listing of the Company in December 2007 to 31 July 2019,
NAV per share has outperformed the benchmark by 3.6% on an
annualised basis.
Share Price and Discount
HVPE's shares have been listed on the London Stock Exchange in
UK pounds sterling since 2015, with a US dollar quote introduced at
the end of 2018. The majority of shareholders are resident in the
UK and it is the sterling share price which is of importance to
them. The USD/GBP exchange rate has significant influence over the
sterling share price. During the six months to 31 July, sterling
depreciated against the US dollar with the rate moving from $1.31
to $1.22. In addition, the discount to NAV at which shares were
traded narrowed significantly with the consequence that the share
price was very strong during the six months, ending at GBP17.20, an
increase of GBP2.94, or 20.6% over the price at the Company's year
end of 31 January. The US dollar price appreciated by 14.7%.
I have referred in earlier statements to the fact that the
market can only price HVPE's shares in relation to known
information. Thus, at 31 July, the market would have been working
from the estimated NAV per share for 30 June which was released in
mid-July as $24.98. In relation to the share price at 31 July, the
shares traded at a discount of 16.3% to the "live" NAV per share
known to the market, that being the 30 June estimate. Details of
the reconciliation of discounts with subsequent updates of NAV per
share are given on page 55 of this Report.
It is very much to be hoped that the considerable resource and
effort that the Company undertakes to further the market's
knowledge of HVPE, together with respect for its performance, will
result in the discount stabilising at a level significantly lower
than it has been for long periods in the past. Indeed, since the
middle of May 2019, HVPE's discount has significantly narrowed
relative to its peers. However, the discount is a matter for the
market to determine and some volatility in the level of discount
must always be expected as the perceived attraction of private
equity as a class, and HVPE in particular, ebbs and flows.
Investors in HVPE's shares should always look beyond short-term
movements in NAV per share and discounts. Private equity is an
asset class for long-term investors who must be able to tolerate
short-term changes in fashion and look towards long-term material
outperformance over listed equity markets such as HVPE's NAV per
share has demonstrated since inception of the Company.
Assets and Diversification
In recent months a number of commentators have pointed out that
well-meaning investor protection regulation has reduced the ability
of the smaller investor to access the historically higher returns
that have been delivered by a well-managed private equity
portfolio. HVPE, as a listed closed-end company, is designed for
such investors. It is a substantial and well-diversified company
with net assets in excess of $2 billion and a market capitalisation
of approximately GBP1.4 billion. HVPE holds material indirect
interests in over 1,000 companies. The majority by value of those
underlying investments is in substantial companies with
well-understood valuation characteristics and consequently the
well-publicised difficulties in relation to liquidity and valuation
that over-reliance on a concentrated portfolio of small venture
companies has caused some other investment vehicles recently are
significantly reduced in respect of HVPE.
Balance Sheet
In earlier statements I have drawn attention to the difficult
balance as the Board and Investment Manager strive to ensure that
the balance sheet contains sufficient long-term assets and
commitments to deliver satisfactory NAV growth, whilst at the same
time not putting at risk the ability of the Company to sustain a
significant deterioration in the world economy and in stock
markets. The illiquid nature of the Company's assets is such that
management of the balance sheet is not an exact science and it
would be very difficult, and potentially seriously detrimental to
shareholders' interests, to reverse policy in the event of a
downturn. The Board and Investment Manager focus on the level of
commitments and the ability of the Company to fund as-yet unfunded
commitments. Annual and half-year reports carry the relevant ratios
and these are updated in the Company's monthly updates.
The modelling that the Investment Manager undertakes is
constantly being refined and discussed with the Board according to
four different scenarios, including one which models a downturn
more serious and longer lasting than the Company endured, without
having to change its strategy, in the Global Financial Crisis in
2008/09. Global stock markets will not always be as benign as they
have been for over ten years now and it is imperative that HVPE, as
a closed-end company with a finite balance sheet, is able to
weather storms as well as prosper in the present sunshine. Part of
the Company's armoury is the $600 million bank facility which is
undrawn at present and committed, subject to customary covenants,
by Credit Suisse and Mitsubishi UFG through to January 2026.
Board Changes
The Company has already announced that two of the original
directors of the Company, Brooks Zug and Keith Corbin, retired from
the Board at the Annual General Meeting ("AGM") in July. In my
statement in the Annual Report I paid tribute to them both and
thanked them for the very substantial part they both played in the
success of the Company since inception.
I am very pleased to report that, at the AGM, shareholders
supported the election of Carolina Espinal, a Managing Director of
the Investment Manager, HarbourVest Partners, as a director to step
into Brooks Zug's shoes. The Board is very grateful to shareholders
for their support for Carolina and indeed their overwhelming
support for all of the resolutions put forward at the AGM. The
Company is the property of the shareholders and the Board draws
much encouragement from the strong endorsement demonstrated through
the votes cast for the resolutions in front of the AGM.
In my statement in the Annual Report I advised that I intend to
stand down from the Board no later than July 2020 and that the
Board was seeking a prospective successor to me as Chairman. As
already announced, following a search led by the Nomination
Committee, chaired by Keith Corbin and undertaken by Trust
Associates, I am very pleased that Edmond Warner was appointed as a
director on 1 August. Ed is a highly experienced director of
investment companies generally and in particular is a former
Chairman of London listed Standard Life Private Equity Trust plc.
Over the months ahead I hope that shareholders will have the
opportunity to meet Ed. He will be present at HVPE's Capital
Markets Day in London in June 2020 and he and I would be very
pleased to meet with interested shareholders.
Outlook
Although listed in London and with the majority of shares owned
by UK residents and institutions, only approximately 4% of HVPE's
underlying assets are represented by UK companies. The present
political uncertainty in the UK is acute and significant volatility
in the USD/GBP exchange rate must be a material risk. Any
strengthening of sterling would be headwind for the Company's
sterling-based share price.
In the US, where the majority of the Company's assets are based,
we are witnessing continuing political stress and some concern for
the economy as evidenced by reversal of the tightening trend in
short-term interest rates. Elsewhere we are seeing the
extraordinary phenomenon of negative interest rates and many asset
prices being pushed higher as investors seek returns. On the
international scene there are potential flash points in the Middle
East and elsewhere. In the face of all this uncertainty, the
Company's Investment Manager, HarbourVest Partners, with more than
36 years of experience of investing in private markets behind them,
and your Board will strive to continue to drive forward the
long-term growth of the Company for the benefit of all
shareholders.
Michael Bunbury
Chairman
22 October 2019
Investment Manager's Report
Portfolio Performance
NAV per Share
HVPE's NAV per share continued to grow over the six months to 31
July 2019. Against a mixed macroeconomic backdrop, and despite
periodic bouts of equity market volatility due to international
trade disputes and ongoing political uncertainty, HVPE's NAV per
share increased by 7.1% from $24.09 at 31 January 2019 to $25.80 at
31 July 2019. Translated into sterling, NAV per share growth was
15.5% due to sterling weakening against the US dollar.
The performance of most major equity market indices was broadly
positive during the first half of the year, recovering from the
sharp declines seen at the end of 2018, and continuing what is now
the longest bull market in history. In line with this, HVPE's
public benchmark, the FTSE AW TR Index (US dollars), increased by
8.3% in the six months to 31 July 2019. Although HVPE's NAV per
share growth of 7.1% lagged this by 1.2 percentage points over the
period, public markets tend to be more volatile, rendering
short-term comparisons less meaningful. Over the year to 31 July
2019, HVPE's NAV per share returned 12.5% against the FTSE AW TR
Index's 3.3% - outperformance of 9.2%. However, longer-term
comparisons through the cycle are more indicative of HVPE's
performance; measured over the period since inception in December
2007, HVPE's NAV per share has outperformed the FTSE AW TR Index by
3.6% on an annualised basis in US dollar terms.
During the six months ended 31 July 2019 there was a $141.7
million net gain on investments, contributing to an overall
increase in net assets of $136.3 million. This compares with a
$121.5 million net gain on investments and overall increase in net
assets of $117.1 million for the six months to 31 July 2018. The
$141.7 million net gain in this financial period was driven by a
broadly equal mix of realised and unrealised gains on the
portfolio.
In percentage terms, the Secondary portfolio was the
best-performing strategy, delivering value growth of 8.8%.
Geographically, the strongest gains came from the Asia Pacific
portfolio, which generated a value increase of 11.6%; this was
followed by the Rest of World assets, which returned 8.8%. In terms
of stage, Venture and Growth Equity was the strongest performer,
growing 13.2% over the six months ended 31 July 2019. This was
followed by Real Assets, which returned 9.5%. More information on
the growth drivers can be found on page 27.
As at 31 July 2019, HVPE held investments in 50 HarbourVest
funds and seven secondary co--investments1 (compared with 46 and
seven at 31 January 2019). Of these, the largest drivers of NAV per
share growth are described below and shown on the corresponding
chart overleaf.
-- An HVPE-seeded real assets vehicle was the largest
contributor, adding $0.29 per share over the six-month period.
-- Fund X Venture was the second largest contributor, adding
$0.22 to HVPE's NAV per share. This fund is a 2015 vintage
currently in the investment phase. As might be expected at this
stage in the fund's life, the majority of this gain came from
unrealised growth.
-- Following behind this was another, more mature fund of the
same strategy, Fund IX Venture. With a vintage year of 2011, this
fund is in the growth phase of its life-cycle. As such, growth
derived from an almost equal mix of realised and unrealised
gains.
-- Co-Investment IV, a 2016 vintage direct co-investment fund,
added $0.12 to NAV per share largely from unrealised gains.
-- Fund X Buyout, a 2015 vintage US-focused buyout fund, was the
fifth largest contributor adding $0.11 to NAV per share over the
period.
1 These include five Secondary Overflow III investments and
Absolute, referred to as "HVPE Avalon Co-Investment L.P.", and
Conversus, referred to as "HVPE Charlotte Co-Investment L.P.", in
the Unaudited Condensed Interim Consolidated Schedule of
Investments. Absolute has been fully realised; however, $505,610
remains in escrow.
Portfolio Cash Flows
HVPE was a net investor in the six months to 31 July 2019,
investing cash of $202.4 million into HarbourVest funds (six months
to 31 July 2018: $202.6 million) and receiving $138.9 million in
distributions (six months to 31 July 2018: $142.1 million). Of the
$202.4 million calls, $101.3 million was drawn down by the
HVPE-seeded real assets vehicle as it completed its first deal -
further details follow below.
The balance of capital calls, excluding the HVPE-seeded real
assets vehicle, is lower than the same period in the prior year, in
part because of the use of leverage at the HarbourVest fund level
(termed "embedded leverage"), and the rate at which this is
utilised and repaid. Most of this embedded leverage is used to
aggregate and delay capital calls on the HarbourVest fund limited
partnerships, including HVPE, and hence will impact cash flows in
any given period. In the six months to 31 July 2019, repayments of
existing embedded leverage were offset by new borrowings on recent
commitments used to smooth the frequency of capital calls. The net
result has been an increase in embedded leverage of $50.5 million
to $323.1 million as at 31 July 2019 from $272.6 million at 31
January 2019. Expressed as a percentage of NAV, the figure
increased from 14.2% to 15.7% over the six-month period. The
increase was driven by the changing mix of current fund exposures
in the portfolio, and in particular the most recent US
fund-of-funds programme, HarbourVest Partners XI.
As previously referenced, the largest HarbourVest fund capital
call in the reporting period ($101.3 million) came from the real
assets vehicle which HVPE seeded in June 2018. This significant
call in February 2019 was used to fund an investment into a global
portfolio of high-quality core infrastructure assets. In contrast
to this unusually large single cash flow, more typical
"business-as-usual" capital calls originated from Mezzanine Income
Fund ($11.8 million) and Fund X Venture ($11.1 million). Closely
following these in US dollar terms were calls of approximately
$10.0 million each to fund investment activity for Co-Investment V
(HarbourVest's most recent co-investment fund), Dover IX (a global
secondary fund), and HIPEP VII (an international fund-of-funds
programme). These are all funds currently in the investment phase
and building out their portfolios.
Distributions of $138.9 million were driven by a mix of
HarbourVest funds across all strategies, with the largest total
amount in the period ($25.9 million) coming from HarbourVest 2013
Direct Fund, a global direct co--investment fund in its growth
phase. A large portion of these proceeds came from the sale of
Toronto-based environmental, safety, and quality management
software provider Intelex Technologies. Strong distributions also
came from Mezzanine Income Fund (a US-focused credit fund), driven
in part by the sale of Five Star Foods, and the Global Annual Fund
(a global multi-strategy fund-of-funds) with proceeds of $10.8
million and $10.2 million received, respectively.
Overall, the net negative cash flow in the period resulted in
HVPE's cash balance declining from $156.6 million to $87.2
million.
Portfolio Companies
During the period, the ten largest individual company
realisations by HVPE's share of proceeds, generated total
distributions of $79.0 million. Of these ten companies, eight were
in HVPE's top 50 portfolio companies at 31 January 2019. Further
details are provided on these eight below (ordered by size of
distribution). The top ten distributions by value are listed on
page 26:
-- HVPE's share of proceeds was $16.1m from the sale of
Australian medical equipment distributor Device Technologies to
Navis Investment Partners. HVPE had exposure to this company
through a secondary purchase completed in 2016. Device Technologies
was HVPE's 6th largest company at 31 January 2019.
-- HVPE's share of proceeds was $12.9m from the sale of Intelex
to Industrial Scientific (a subsidiary of Fortive Corporation).
This was a 2015 co-investment alongside JMI Equity. Intelex was
HVPE's 25th largest company at 31 January 2019.
-- HVPE's share of proceeds was $12.5m from the sale of vending
food and beverage provider Five Star Food Service to Freeman Spogli
& Company. This was a 2016 co-investment into the subordinated
debt and equity of the company. Five Star was HVPE's 8th largest
company at 31 January 2019.
-- HVPE's share of proceeds was $10.5m from the recapitalisation
of data and analytics solutions provider Appriss. This was a 2014
co-investment alongside Insight Venture Partners. This company was
HVPE's fifth largest company at 31 January 2019.
-- Following the continued sell down of shares in publicly
traded company Avalara ("AVLR"), HVPE's 32nd largest company at 31
January 2019, the Company's share of the proceeds was $6.8m.
-- HVPE's share of the proceeds was $4.6m from the sale of
German hearing aid manufacturer Sivantos to Widex. This was a 2015
co-investment alongside EQT Partners. Sivantos was HVPE's 35th
largest company at 31 January 2019.
-- HVPE's share of the proceeds was $3.7m from the
recapitalisation of office supply retailer Staples. This was a 2017
co-investment alongside Sycamore Partners. Staples was HVPE's 10th
largest position at 31 January 2019.
-- HVPE's share of the proceeds was $3.1m from the
recapitalisation of South Korean cement manufacturer Ssangyong
Cement Industrial Co. This was a 2016 co-investment alongside Hahn
& Co. Ssangyong was HVPE's 11th largest company at 31 January
2019.
During the six months ended 31 July 2019, there were 178
liquidity events, down from 215 for the six months to 31 July 2018.
The lower volume of activity for the first half of 2019 can broadly
be explained by wider trends across the private equity and venture
industry, which has seen a reduction in the volume of deals
compared with historic levels. Approximately 73% (130) of these
liquidity events were trade sales or sponsor-to-sponsor
transactions, with the remaining 27% (48) being Initial Public
Offerings ("IPOs").
Of HVPE's 178 total liquidity events, 107, or 60%, related to
venture-backed companies. This figure is representative of wider
market trends, as the first half of 2019 was an exceptional period
for venture exits with total venture-backed exit value eclipsing
every full-year total on record. The value was largely driven by
IPOs, and in particular by 37 venture-backed IPOs which took place
in the second quarter including many well-known and high-profile
'unicorns' - private companies with individual valuations greater
than US$1 billion - finally transitioning to the public markets. Of
the 48 IPOs, 77% were venture-backed companies and included names
such as Uber, Lyft, Pinterest, Beyond Meat, CrowdStrike and Slack
Technologies.
Company Activity
New Fund Commitments
In the six months ended 31 July 2019, HVPE made total
commitments of $315.0 million across six HarbourVest funds (six
months to 31 July 2018: $355.0 million). These cover all the
strategies offered by HarbourVest in the period, as detailed on
page 26; however, by value, the majority of commitments were
weighted towards US primary funds (i.e. fund-of funds) as HVPE
looks to rebalance its exposure here, in line with its Strategic
Asset Allocation ("SAA") targets.
Of the total capital committed, the largest commitment ($120.0
million) was made to HarbourVest Partners XI Buyout, a US-focused
buyout fund-of-funds. This brings the total amount committed by
HVPE to this fund to $350.0 million. The capital drawdown profile
of such a programme typically extends over a period of several
years, which helps to drive an even allocation across vintages,
thereby reducing the risk of exposure to a single poor-performing
vintage year. Other large commitments during the period included
$50.0 million each to a global secondary fund (Dover Street X), a
real assets fund (Real Assets IV), and HarbourVest's latest global
co-investment fund (Co-Investment V).
These commitments are all in line with the Company's SAA targets
(see page 16 for more details) and reflect the Investment Manager's
and Board's current perspective on the most appropriate portfolio
composition required to optimise long-term NAV growth for
shareholders.
Market Environment
Supported by a strong fundraising environment, record dry
powder, and buoyant debt markets continuing to underpin asset
valuations, the global private equity market maintained its
momentum during the first half of the year. Signals indicating
moderation in Europe and Asia were offset by strong year-on-year
metrics in the US, providing an overall generally positive outlook
across private markets.
Despite high purchase price multiples, investment activity
remained stable in the US and Europe, respectively. Valuations in
these regions are now above their pre-crisis levels ten years ago,
requiring managers to be disciplined in selection. Many have
favoured participation in follow-on rounds or bolt-on acquisitions,
which continued to represent a substantial portion of first half
deal count. Take-privates, or public-to-privates ("P2P"s),
continued to increase deal flow; with the recent P2P announcements
in Q2, this is expected to be a record year. Investment volumes in
Asia Pacific were significantly lower year-on-year, largely due to
a sharp decline in China resulting from a slowdown in large
late--stage technology financing rounds.
Strong exit activity in the US was countered by weaker levels in
other regions. In Europe, despite a good second quarter, the first
half of the year had a 7% decline in exit value and 30% less exit
activity compared with the same period last year. The difference
between these figures was a result of larger average transaction
sizes, primarily attributable to several closed mega deals worth a
total of EUR26 billion over the first half of the year. Exit levels
in Asia were moderate following a very strong 2018. The US was more
consistent and remained robust, particularly across venture and
growth equity, given the notable IPO registrations during the
period.
Principal Risks and Uncertainties
Risk Factors and Internal Controls
The Board is responsible for the Company's risk management and
internal control systems, and actively monitors the risks faced by
the Company, taking steps to mitigate and minimise these where
possible.
In January 2019 the Board conducted a fresh exercise to identify
risks for HVPE. It determined 12 main risks which have a higher
probability and a significant potential impact on performance,
strategy, reputation, or operations. These are evaluated on a
semi-annual basis. Following this, six have been identified as the
principal risks faced by the Company, where the combination of
probability and impact is assessed as making these the most
significant current risks. A description of each is outlined below.
The first five remain unchanged, and as disclosed in the 31 January
2019 Annual Report; however, "Political Risk" has now been
added.
Risk Description Mitigating Factor
----------------- ------------------------------------------ --------------------------------------
Balance Sheet The Company's balance sheet The Board has put in place a
Risks strategy and its policy for monitoring programme, determined
the utilisation of leverage with reference to portfolio
are described on page 48 of models, in order to mitigate
the Company's 2019 Annual Report. against the requirement to sell
The Company continues to maintain assets at a discount during
an over-commitment strategy periods of NAV decline. Further,
and may draw on its $600 million the monitoring programme also
credit facility to bridge periods considers the level of debt
of negative cash flow when at the HarbourVest fund level.
capital calls on investments Both the Board and the Investment
are greater than distributions. Manager actively monitor these
The level of potential borrowing metrics and will take appropriate
available under the credit action as required to attempt
facility could be negatively to mitigate these risks. The
affected by declining NAVs. Company's $600 million credit
In a period of declining NAVs, facility is now available on
reduced realisations, and rapid a rolling five-year evergreen
substantial cash calls, the basis.
Company's net leverage ratio
could increase beyond an appropriate
level, resulting in a need
to sell assets. In addition,
a reduction in the availability
or utilisation of bridging
debt at the HarbourVest fund
level could result in an increase
in capital calls to a level
in excess of the base case
forecast.
----------------- ------------------------------------------ --------------------------------------
Popularity Investor sentiment may change The Board has set the Investment
of Listed towards the Listed Private Manager the objective of ensuring
Private Equity sector, resulting in that the widest possible variety
Equity Sector a widening of the Company's of investors are informed about
share price discount to NAV. the Company's performance and
proposition in order to mitigate
against this. In addition, the
Investment Manager actively
participates in the marketing
of the sector. The size of the
Company means that its own success
will contribute to the popularity
of the sector as a whole.
----------------- ------------------------------------------ --------------------------------------
Public Market Public markets in many developed Both the Board and the Investment
Risks countries are trading close Manager actively monitor the
to all-time highs. While economic Company's NAV, and exposure
fundamentals have improved, to individual public markets
structural imbalances remain. is partially mitigated by the
The Company makes venture capital geographical diversification
and buyout investments in companies of the portfolio. The Board
where operating performance notes that it has limited ability
is affected by the broader to mitigate public market risk.
economic environment within Stress testing takes place as
the countries in which those part of the portfolio composition
companies operate. While these process to model the effect
companies are generally privately of different macroeconomic scenarios
owned, their valuations are, in order to provide comfort
in most cases, influenced by to the Board that the balance
public market comparables. of risk and reward is appropriate
In addition, approximately in the event of a downturn in
10% of the Company's portfolio public markets.
is made up of publicly-traded
securities whose values increase
or decrease alongside public
markets. Should global public
markets decline, or the economic
situation deteriorate, it is
likely that the Company's NAV
could be negatively affected.
----------------- ------------------------------------------ --------------------------------------
Performance The Company is dependent on This risk is mitigated by the
of HarbourVest its Investment Manager and Board monitoring the performance
Partners HarbourVest's investment professionals. of the Investment Manager on
With the exception of the 2011 an ongoing basis, including
Absolute investment and 2012 through regular reports and
Conversus investment, nearly due diligence visits to the
all of the Company's assets, Investment Manager's offices.
save for cash balances and The establishment of a specific
short-term liquid investments, HVPE Investment Committee within
are invested in HarbourVest HVP has enhanced accountability
funds. and governance of the relationship.
Additionally, HarbourVest employees
play key roles in the operation
and control of the Company.
The departure or reassignment
of some or all of HarbourVest's
professionals could prevent
the Company from achieving
its investment objectives.
----------------- ------------------------------------------ --------------------------------------
Trading Liquidity Any ongoing or substantial Since September 2015, the Company's
and Price discount to NAV has the potential shares have traded on the Main
to damage the Company's reputation Market of the London Stock Exchange,
and to cause shareholder dissatisfaction. which has increased the liquidity
The five largest shareholders of the shares and broadened
represent approximately 47% the appeal to a wide variety
of the Company's shares in of shareholders. In addition,
issue. This may contribute the Board continues to monitor
to a lack of liquidity and the discount to NAV and will
widening discount. Also, in consider appropriate solutions
the event that a substantial to address any ongoing or substantial
shareholder chooses to exit discount to NAV.
the share register, this may
have an effect on the Company's
share price and consequently
the discount to NAV.
----------------- ------------------------------------------ --------------------------------------
Political There are heightened global The Company's exposure to Brexit
Risk political risks facing the is modest with underlying investment
world economy at the moment exposure to the UK relatively
with Brexit, trade wars, US low. The Board is also monitoring
protectionism, and a UK government HarbourVest's approach to any
without a working majority. Brexit effect on its operations.
The Board has also considered
UK political scenarios and continues
to closely monitor developments.
----------------- ------------------------------------------ --------------------------------------
Directors' Report
Semi-Annual Report and Unaudited Condensed Interim Consolidated
Financial Statements
A description of the important events that have occurred during
the six months ended 31 July 2019 and their impact on the
performance of the Company are given in the Semi-Annual Report and
Unaudited Condensed Interim Consolidated Financial Statements (the
"Interim Financial Statements") - together the "Semi-Annual Report
and Accounts"; specifically the Chairman's Statement and the
Investment Manager's Report, alongside the Interim Financial
Statements, and are incorporated here by reference.
The principal risks and uncertainties facing the Company and how
the Company seeks to mitigate them can be found on pages 20 and 21.
Political Risk has been added to the risks disclosed in the
Company's 2019 Annual Report and Accounts.
There were no material related party transactions which took
place in the first six months of the financial year, other than
those disclosed in Note 9 to the Interim Financial Statements.
There have been no changes to the related party transactions
described in the 2019 Annual Report and Accounts that could have a
material effect on the financial position or performance of the
Company in the first six months of the current financial year.
This Semi-Annual Report and Accounts has been reviewed by the
Company's Auditor in accordance with guidance contained in
International Standard on Review Engagements 2410 (UK and Ireland)
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board ("ISRE 2410").
Going Concern
The performance of the investments held by the Company over the
reporting period are described in Note 4 to the Interim Financial
Statements and the outlook for the future is described in the
Chairman's Statement. The Company's financial position, its cash
flows, and liquidity position are set out in the Semi-Annual Report
and Accounts, and the Company's financial risk management
objectives and policies, details of its financial instruments, and
its exposures to market risk, liquidity risk, and cash flow risk,
are set out in the Governance Report on pages 55 and 56 in the
Company's 2019 Annual Report and Accounts, and are unchanged. After
making due enquiries, the Directors have a reasonable expectation
that the Company has adequate resources to continue in operational
existence for at least 12 months from the date of this report.
Accordingly, they continue to adopt the going concern basis in the
preparation of this Semi-Annual Report and Accounts.
Statement of Directors' Responsibilities in Respect of the
Semi-Annual Report and Accounts
The Directors are responsible for preparing the Semi--Annual
Report and Accounts in accordance with applicable law and
regulations.
The Directors confirm that to the best of their knowledge:
-- the Semi-Annual Report and Accounts have been prepared in
accordance with US GAAP and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
-- the Chairman's Statement and Investment Manager's Report
include a fair review of the information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules
("DTR"), being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the Interim Financial Statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position or the performance of the entity
during that period; and any changes in the related party
transactions described in the 2019 Annual Report that could do
so.
By order of the Board
22 October 2019
Unaudited Condensed Interim Consolidated Statements of Assets
and Liabilities
At 31 July 2019 and 31 January 2019
31 January
31 July 2019
In US dollars 2019 (Unaudited) (Audited)
---------------------------------------------------- ------------------ --------------
ASSETS
Investments (Note 4) 1,965,407,733 1,760,181,991
Cash and equivalents 87,246,079 156,570,557
Other assets 9,152,090 9,745,502
---------------------------------------------------- ------------------ --------------
Total assets 2,061,805,902 1,926,498,050
LIABILITIES
Accounts payable and accrued expenses 1,501,231 2,403,836
Accounts payable to HarbourVest Advisers L.P. (Note
9) 92,427 138,563
---------------------------------------------------- ------------------ --------------
Total liabilities 1,593,658 2,542,399
Commitments (Note 5)
NET ASSETS $2,060,212,244 $1,923,955,651
NET ASSETS CONSIST OF
Shares, unlimited shares authorised, 79,862,486
shares issued and outstanding at
31 July 2019 and 31 January 2019, no par value 2,060,212,244 1,923,955,651
---------------------------------------------------- ------------------ --------------
NET ASSETS $2,060,212,244 $1,923,955,651
Net asset value per share $25.80 $24.09
---------------------------------------------------- ------------------ --------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
The Unaudited Condensed Interim Consolidated Financial
Statements on pages 38 to 51 were authorised and approved for issue
by the Directors on 22 October 2019 and were signed on its behalf
by:
Michael Bunbury Steven Wilderspin
Chairman Chairman of the Audit and Risk Committee
Unaudited Condensed Interim Consolidated Statements of
Operations
For the Six-month Periods Ended 31 July 2019 and 2018
In US dollars 31 July 2019 31 July 2018
------------------------------------------------------ ------------ ------------
REALISED AND UNREALISED GAINS (LOSSES) ON INVESTMENTS
Net realised gain on investments 68,272,120 33,228,561
Net change in unrealised appreciation on investments 73,453,115 88,234,256
------------------------------------------------------ ------------ ------------
NET GAIN ON INVESTMENTS 141,725,235 121,462,817
INVESTMENT INCOME
Interest from cash and equivalents 986,969 1,842,239
EXPENSES
Non-utilisation fees (Note 6) 2,935,360 2,890,972
Investment services (Note 3) 956,184 837,315
Financing expenses 769,866 693,651
Professional fees 504,443 491,311
Management fees (Note 3) 378,164 395,813
Directors' fees and expenses (Note 9) 278,582 308,997
Marketing expenses 155,370 176,846
Other expenses 477,642 363,560
------------------------------------------------------ ------------ ------------
Total expenses 6,455,611 6,158,465
------------------------------------------------------ ------------ ------------
NET INVESTMENT LOSS (5,468,642) (4,316,226)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $136,256,593 $117,146,591
------------------------------------------------------ ------------ ------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of Changes
in Net Assets
For the Six-month Periods Ended 31 July 2019 and 2018
In US dollars 31 July 2019 31 July 2018
----------------------------------------------------- -------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net realised gain on investments 68,272,120 33,228,561
Net increase in unrealised appreciation 73,453,115 88,234,256
Net investment loss (5,468,642) (4,316,226)
----------------------------------------------------- -------------- --------------
Net increase in net assets resulting from operations 136,256,593 117,146,591
NET ASSETS AT BEGINNING OF PERIOD 1,923,955,651 1,713,866,836
----------------------------------------------------- -------------- --------------
NET ASSETS AT OF PERIOD $2,060,212,244 $1,831,013,427
----------------------------------------------------- -------------- --------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of Cash
Flows
For the Six-month Periods Ended 31 July 2019 and 2018
In US dollars 31 July 2019 31 July 2018
--------------------------------------------------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations 136,256,593 117,146,591
Adjustments to reconcile net increase in net assets
resulting from operations to net cash used in operating
activities:
Net realised gain on investments (68,272,120) (33,228,561)
Net increase in unrealised appreciation (73,453,115) (88,234,256)
Contributions to private equity investments (202,413,602) (202,633,073)
Distributions from private equity investments 138,913,095 142,111,175
Other (355,329) 357,380
--------------------------------------------------------- ------------- -------------
Net cash used in operating activities (69,324,478) (64,480,744)
--------------------------------------------------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing on the credit facility 30,000,000 -
Repayments in respect of the credit facility (30,000,000) -
--------------------------------------------------------- ------------- -------------
Net change in financing activities - -
--------------------------------------------------------- ------------- -------------
NET DECREASE IN CASH AND EQUIVALENTS (69,324,478) (64,480,744)
--------------------------------------------------------- ------------- -------------
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 156,570,557 256,961,145
--------------------------------------------------------- ------------- -------------
CASH AND EQUIVALENTS AT OF PERIOD $87,246,079 $192,480,401
--------------------------------------------------------- ------------- -------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Schedule of
Investments
At 31 July 2019
In US dollars
Fair Value
as a %
Unfunded Amount Distributions of
US Funds Commitment Invested* Received Fair Value Net Assets
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners V-Partnership
Fund L.P. 2,220,000 46,709,079 45,924,243 1,143,071 0.1
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VI-Direct
Fund L.P. 1,312,500 46,722,408 38,404,878 6,668,449 0.3
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VI-Partnership
Fund L.P. 5,175,000 204,623,049 236,539,438 2,185,888 0.1
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VI-Buyout
Partnership Fund L.P. 450,000 8,633,048 9,413,708 13,935 0.0
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VII-Venture
Partnership Fund L.P. 2,318,750 135,290,448 182,667,476 25,651,921 1.2
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VII-Buyout
Partnership Fund L.P. 3,850,000 74,417,291 100,416,568 3,388,021 0.2
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VIII-Cayman
Mezzanine and Distressed
Debt Fund L.P. 2,000,000 48,201,553 57,900,596 7,773,257 0.4
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VIII-Cayman
Buyout
Fund L.P. 11,250,000 241,508,801 333,348,159 73,765,016 3.6
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners VIII-Cayman
Venture Fund L.P. 1,000,000 49,191,736 64,847,138 28,528,922 1.4
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners 2007
Cayman Direct Fund L.P. 2,250,000 97,876,849 159,156,127 8,646,480 0.4
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners IX-Cayman
Buyout
Fund L.P. 12,247,500 59,033,226 40,680,447 55,927,366 2.7
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners IX-Cayman
Credit Opportunities Fund
L.P. 3,125,000 9,423,693 5,457,000 8,375,313 0.4
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners IX-Cayman
Venture
Fund L.P. 3,500,000 66,825,714 40,312,271 87,629,790 4.3
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners 2013
Cayman Direct Fund L.P. 3,228,996 97,131,486 88,766,709 90,559,921 4.4
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners Cayman
Cleantech
Fund II L.P. 5,200,000 14,855,952 3,167,605 14,270,115 0.7
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners X Buyout
Feeder
Fund L.P. 166,320,000 85,707,552 22,544,063 98,682,364 4.8
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners X Venture
Feeder
Fund L.P. 61,050,000 87,003,838 9,735,453 122,144,341 5.9
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners Cayman
Mezzanine Income Fund L.P. 8,155,000 42,066,579 17,452,938 39,950,180 1.9
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners XI Buyout
Feeder
Fund L.P. 350,000,000 - - 1,982,917 0.1
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners XI Micro
Buyout Feeder Fund L.P. 40,000,000 - - 90,776 0.0
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Partners XI Venture
Feeder
Fund L.P. 109,250,000 5,750,000 - 6,087,210 0.3
------------------------------------ ----------- ------------- ------------- ----------- -----------
HarbourVest Adelaide Feeder
L.P. 34,125,000 115,875,000 - 134,034,055 6.5
------------------------------------ ----------- ------------- ------------- ----------- -----------
Total US Funds 828,027,746 1,536,847,302 1,456,734,817 817,499,308 39.7
------------------------------------ ----------- ------------- ------------- ----------- -----------
Fair Value
as a %
Unfunded Amount Distributions of
International/Global Funds Commitment Invested* Received Fair Value Net Assets
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest International
Private Equity Partners
III-Partnership Fund L.P. 3,450,000 147,728,557 148,439,622 465,725 0.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest International
Private Equity Partners
IV-Direct Fund L.P. - 61,452,400 53,436,349 2,110,357 0.1
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP V-2007 Cayman European
Buyout Companion Fund
L.P.(--) 1,576,667 63,880,350 77,915,070 7,558,600 0.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
Dover Street VII Cayman
L.P.(++) 4,413,862 95,586,138 126,435,813 9,749,211 0.5
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VI-Cayman Partnership
Fund L.P.** 6,645,600 116,723,625 77,378,638 111,845,761 5.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VI-Cayman Asia Pacific
Fund L.P. 3,000,000 47,187,431 29,830,214 44,751,726 2.2
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VI-Cayman Emerging
Markets Fund L.P. - 30,059,489 7,122,156 28,823,465 1.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HVPE Avalon Co-Investment
L.P. 1,643,962 85,135,136 124,138,700 505,610 0.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
Dover Street VIII Cayman
L.P. 18,000,000 162,124,389 182,087,541 72,497,334 3.5
----------------------------------- -------------- -------------- -------------- -------------- -----------
HVPE Charlotte Co-Investment
L.P. - 93,894,011 137,763,857 21,682,709 1.1
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Global Annual
Private Equity Fund L.P. 17,800,000 82,201,202 39,424,670 89,352,334 4.3
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VII Partnership
Feeder Fund L.P. 37,187,500 87,812,500 14,305,547 103,677,225 5.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VII Asia Pacific
Feeder Fund L.P. 7,125,000 22,875,000 2,889,847 28,372,111 1.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VII Emerging Markets
Feeder
Fund L.P. 6,600,000 13,400,000 2,041,541 14,634,007 0.7
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VII Europe Feeder
Fund L.P. 24,422,580 46,842,243 10,549,774 51,360,225 2.5
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Canada Parallel
Growth Fund L.P.(++++) 11,960,785 12,453,815 580,890 17,435,105 0.8
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest 2015 Global
Fund L.P. 30,000,000 70,017,309 14,733,000 87,737,975 4.3
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest 2016 Global
AIF L.P. 43,000,000 57,026,107 18,265,587 61,284,760 3.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Partners Co-Investment
IV AIF L.P. 7,000,006 92,999,994 7,685,830 110,918,303 5.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
Dover Street IX Cayman
L.P. 37,000,000 63,000,000 19,979,746 66,225,565 3.2
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Real Assets
III Feeder L.P. 21,000,000 29,000,000 5,917,231 29,589,767 1.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest 2017 Global
AIF L.P. 58,000,000 42,020,959 5,933,218 45,310,924 2.2
----------------------------------- -------------- -------------- -------------- -------------- -----------
HIPEP VIII Partnership
AIF L.P. 144,500,000 25,500,000 3,051,563 28,451,171 1.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
Secondary Overflow III
Tranche B 489,717 9,668,120 1,563,155 19,785,829 1.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Asia Pacific
VIII AIF
Fund L.P. 37,500,000 12,505,566 609,439 12,894,548 0.6
----------------------------------- -------------- -------------- -------------- -------------- -----------
Secondary Overflow III
Tranche C 1,335,088 8,267,887 6,016,969 5,294,524 0.3
----------------------------------- -------------- -------------- -------------- -------------- -----------
Secondary Overflow III
Tranche F 13,213,541 16,786,459 1,958,419 21,331,112 1.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
Secondary Overflow III
Tranche G 2,443,597 12,556,403 1,241,842 13,652,535 0.7
----------------------------------- -------------- -------------- -------------- -------------- -----------
Secondary Overflow III
Tranche H 10,200,000 19,800,000 - 22,276,139 1.1
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest 2018 Global
Feeder
Fund L.P. 61,600,000 8,400,000 - 9,135,227 0.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Partners Co-Investment
V Feeder Fund L.P. 90,000,000 10,048,219 - 9,044,022 0.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest 2019 Global
Feeder
Fund L.P. 25,000,000 - - (64,101) (0.0)
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Real Assets
IV Feeder
Fund L.P. 50,000,000 - - - -
----------------------------------- -------------- -------------- -------------- -------------- -----------
HarbourVest Credit Opportunities
Fund II L.P. 20,000,000 - - (51,431) (0.0)
----------------------------------- -------------- -------------- -------------- -------------- -----------
Dover Street X Feeder
Fund L.P. 50,000,000 - - 270,051 0.0
----------------------------------- -------------- -------------- -------------- -------------- -----------
Total International/Global
Funds 846,107,905 1,646,953,309 1,121,296,228 1,147,908,425 55.7
----------------------------------- -------------- -------------- -------------- -------------- -----------
TOTAL INVESTMENTS $1,674,135,651 $3,183,800,611 $2,578,031,045 $1,965,407,733 95.4
----------------------------------- -------------- -------------- -------------- -------------- -----------
* Includes purchase of limited partner interests for shares and cash at the time of HVPE's IPO.
Includes ownership interests in HarbourVest Partners VII-Cayman
Partnership entities.
++ Includes ownership interest in Dover Street VII (AIV 1) Cayman L.P.
** Fund denominated in euros. Commitment amount is
EUR100,000,000.
-- Fund denominated in euros. Commitment amount is EUR47,450,000.
Fund denominated in euros. Commitment amount is
EUR63,000,000.
++++ Fund denominated in Canadian dollars. Commitment amount is
C$32,000,000.
As of 31 July 2019, the cost basis of partnership investments is
$1,621,007,910.
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Notes to the Unaudited Condensed Interim Consolidated Financial
Statements
Note 1 Company Organisation and Investment Objective
HarbourVest Global Private Equity Limited (the "Company" or
"HVPE") is a closed-end investment company registered with the
Registrar of Companies in Guernsey under The Companies (Guernsey)
Law, 2008 (as amended). The Company's registered office is BNP
Paribas House, St Julian's Avenue, St Peter Port, Guernsey GY1
1WA.
The Company was incorporated and registered in Guernsey on 18
October 2007. HVPE is designed to offer shareholders long-term
capital appreciation by investing
in a diversified portfolio of private equity investments.
The Company invests in private equity through private equity
funds and may make co-investments or other opportunistic
investments. The Company is managed by HarbourVest Advisers L.P.
(the "Investment Manager"), an affiliate of HarbourVest Partners,
LLC ("HarbourVest"), a private equity fund-of-funds manager. The
Company is intended to invest in and alongside existing and
newly-formed HarbourVest funds. HarbourVest is a global private
equity fund-of-funds manager and typically invests capital in
primary partnerships, secondary investments, and direct
co-investments across vintage years, geographies, industries, and
strategies.
Operations of the Company commenced on 6 December 2007,
following the initial global offering of the Class A ordinary
shares.
Share Capital
At 31 July 2019, the Company's shares were listed on the London
Stock Exchange under the ticker "HVPE". At 31 July 2019 and 31
January 2019, there were 79,862,486 shares issued and outstanding.
The shares are entitled to the income and increases and decreases
in the net asset value ("NAV") of the Company, and to any dividends
declared and paid, and have full voting rights. Dividends may be
declared by the Board of Directors and paid from available assets
subject to the Directors being satisfied that the Company will,
immediately after payment of the dividend, satisfy the statutory
solvency test prescribed by The Companies (Guernsey) Law, 2008 (as
amended).
Any dividends will be paid to shareholders pro rata to their
shareholdings.
The shareholders must approve any amendment to the Memorandum
and Articles of Incorporation. The approval of 75% of the shares is
required in respect of any changes that are administrative in
nature, any material change from the investment strategy and/or
investment objective of the Company, or any change to the terms of
the investment management agreement.
There is no minimum statutory capital requirement under Guernsey
law.
Investment Manager, Company Secretary, and Administrator
The Board has delegated certain day-to-day operations of the
Company to the Investment Manager and the Company Secretary and
Administrator, under advice to the Directors, pursuant to service
agreements with those parties, within the context of the strategy
set by the Board. The Investment Manager is responsible for, among
other things, selecting, acquiring, and disposing of the Company's
investments, carrying out financing, cash management, and risk
management activities, providing investment advisory services,
including with respect to HVPE's investment policies and
procedures, and arranging for personnel and support staff of the
Investment Manager to assist in the administrative and executive
functions of the Company.
Directors
The Directors are responsible for the determination of the
investment policy of the Company on the advice of the Investment
Manager and have overall responsibility for the Company's
activities. This includes the periodic review of the Investment
Manager's compliance with the Company's investment policies and
procedures and the approval of certain investments. A majority of
directors must be independent directors and not affiliated with
HarbourVest or any affiliate of HarbourVest. On 25 July 2019, Keith
Corbin and Brooks Zug resigned from the Board of Directors, and
Carolina Espinal was appointed as Brooks Zug's successor.
Note 2 Summary of Significant Accounting Policies
Accounting policies have been applied consistently as presented
in the latest audited accounts.
Note 3 Material Agreements and Related Fees
Administrative Agreement
The Company retained BNP Paribas ("BNP") as Company Secretary
and Administrator for the period from 11 May 2018 to 31 July 2019.
Fees for these services are paid as invoiced by BNP and include an
administration fee of GBP50,000 per annum, a secretarial fee of
GBP50,000 per annum, compliance services fee of GBP15,000 per
annum, ad-hoc service fees, and reimbursable expenses. The Company
had previously retained JTC Group as Company Secretary and
Administrator for the period
from 2 February 2017 to 10 May 2018.
During the period ended 31 July 2019, fees of $73,266 were
incurred from BNP and are included as other expenses in the
Unaudited Condensed Interim Consolidated Statements of Operations.
During the period ended 31 July 2018, fees of $43,726 were incurred
from BNP and fees of $56,655 were incurred from JTC Group and are
included as other expenses in the Unaudited Condensed Interim
Consolidated Statements of Operations.
Registrar
The Company has retained Link Asset Services (formerly "Capita")
as share registrar. Fees for this service include a base fee of
GBP22,593, plus other miscellaneous expenses. During the periods
ended 31 July 2019 and 2018, registrar fees of $21,427 and $26,877,
respectively, were incurred and are included as other expenses in
the Unaudited Condensed Interim Consolidated Statements of
Operations.
Independent Auditor's Fees
For the six-month periods ended 31 July 2019 and 2018, fees of
$142,983 and $141,300 were accrued, respectively, and are included
within the professional fees in the Unaudited Condensed Interim
Consolidated Statements of Operations. The 31 July 2019 figure
includes $64,443, which represents approximately half of the 31
January 2020 annual audit fee, and $6,802 relating to the prior
financial year's audit fee. In addition, the 31 July 2019 figure
includes fees of $71,738 (2018: $73,600) for audit-related services
due to the Auditor to conduct a review of the Interim Financial
Statements for each period end, commencing with the 31 July 2018
report. Other non-audit fees due to the Auditor, Ernst & Young
LLP, by the Company were nil for the six-month periods ended 31
July 2019 and 2018.
Investment Management Agreement
The Company has retained HarbourVest Advisers L.P. as the
Investment Manager. The Investment Manager is reimbursed for costs
and expenses incurred on behalf of the Company in connection with
the management and operation of the Company. The Investment Manager
does not directly charge HVPE management fees or performance fees
other than with respect to parallel investments. However, as an
investor in the HarbourVest funds, HVPE is charged the same
management fees and is subject to the same performance allocations
as other investors in such HarbourVest funds. During the periods
ended 31 July 2019 and 2018, reimbursements paid by the Company for
services provided by the Investment Manager were $956,184 and
$837,315, respectively.
On 30 July 2019, HVPE approved a revised Investment Management
Agreement, which has been updated for legal and regulatory changes,
and other minor amendments.
During the period ended 31 July 2019, HVPE had two parallel
investments: HarbourVest Acquisition S.à.r.l. (via HVPE Avalon
Co-Investment L.P.) and HarbourVest Structured Solutions II, L.P.
(via HVPE Charlotte Co- Investment L.P.). Management fees paid for
the parallel investments made by the Company were consistent with
the fees charged by the funds alongside which the parallel
investments were made during the periods ended 31 July 2019 and
2018. The HVPE Avalon Co-Investment L.P. management fee was
terminated on 30 September 2017. Management fees included in the
Unaudited Condensed Interim Consolidated Statements of Operations
are shown in the table below:
For the Six-month Periods Ended 31 July 2019 and 2018
2019 2018
----------------------------------- -------- --------
HVPE Charlotte Co--Investment L.P. 378,164 395,813
----------------------------------- -------- --------
Total Management Fees $378,164 $395,813
----------------------------------- -------- --------
For the periods ended 31 July 2019 and 2018, management fees on
the HVPE Charlotte Co-Investment L.P. investment were calculated
based on a weighted average effective annual rate of 0.89% and
0.95%, respectively, on capital originally committed (0.87% and
0.91%, respectively, on committed capital net of management fee
offsets) to the parallel investment.
Note 4 Investments
In accordance with the authoritative guidance on fair value
measurements and disclosures under US generally accepted accounting
principles ("US GAAP"), the Company discloses the fair value of its
investments in a hierarchy that prioritises the inputs to valuation
techniques used to measure the fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The
guidance establishes three levels of the fair value hierarchy as
follows:
Level 1 - Inputs that reflect unadjusted quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access at the measurement date.
Level 2 - Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly, including
inputs in markets that are not considered to be active.
Level 3 - Inputs that are unobservable. Generally, the majority
of the Company's investments are valued utilising unobservable
inputs, and are therefore classified within Level 3.
Level 3 investments include limited partnership interests in
HarbourVest funds which report under US GAAP. Inputs used to
determine fair value are primarily based on the most recently
reported NAV provided by the underlying investment manager as a
practical expedient under Accounting Standards Codification ("ASC")
820. The fair value is then adjusted for known investment operating
expenses and subsequent transactions, including investments,
realisations, changes in foreign currency exchange rates, and
changes in value of private and public securities.
Income derived from investments in HarbourVest funds is recorded
using the equity pick-up method. Under the equity pick-up-method of
accounting, the Company's proportionate share of the net income
(loss) and net realised gains (losses), as reported by the
HarbourVest funds, is reflected in the Unaudited Condensed Interim
Consolidated Statements of Operations as net realised gain (loss)
on investments. The Company's proportionate share of the aggregate
increase or (decrease) in unrealised appreciation, as reported by
the HarbourVest funds, is reflected in the Unaudited Condensed
Interim Consolidated Statements of Operations.
Because of the inherent uncertainty of these valuations, the
estimated fair value may differ significantly from the value that
would have been used had a ready market for this security existed,
and the difference could be material.
During the periods ended 31 July 2019 and 2018, the Company made
contributions of $202,413,602 and $202,633,073, respectively, to
Level 3 investments and received distributions of $138,913,095 and
$142,111,175, respectively, from Level 3 investments. As of 31 July
2019, $1,965,407,733 of the Company's investments are classified as
Level 3. As of 31 January 2019, $1,760,181,991 of the Company's
investments were classified as Level 3.
The Company recognises transfers at the current value at the
transfer date. There were no transfers during the periods ended 31
July 2019 and 2018. Investments include limited partnership
interests in private equity partnerships, all of which carry
restrictions on redemption. The investments are non-redeemable and
the Investment Manager estimates an average remaining life of 11
years with a range of 1 to 34 years remaining.
As of 31 July 2019, the Company had invested $3,367,172,716, or
66.8% of the Company's committed capital in investments, and had
received $2,781,174,707 in cumulative distributions (including
dividends from the formerly held investment HarbourVest Senior
Loans Europe).
There were no investment transactions during the periods ended
31 July 2019 and 2018 in which an investment was both acquired and
disposed of during the period.
Note 5 Commitments
As of 31 July 2019, the Company has unfunded investment
commitments to other limited partnerships of $1,674,135,651 which
are payable upon notice by the partnerships to which the
commitments have been made. Unfunded investment commitments of
$1,629,530,019 are denominated in US dollars, $32,644,847 are
denominated in euros, and $11,960,785 are denominated in Canadian
dollars. As of 31 January 2019, the Company had unfunded investment
commitments to other limited partnerships of $1,562,731,444.
Unfunded investment commitments of $1,513,163,568 were denominated
in US dollars, $36,265,545 were denominated in euros, and
$13,302,331 were denominated in Canadian dollars.
Note 6 Debt Facility
As of 31 July 2019 and 31 January 2019, the Company had an
agreement with Mitsubishi UFJ Trust and Banking Corporation (MUFG)
and Credit Suisse for the provision of a multi-currency revolving
credit facility (the "Facility") for an aggregate amount up to $600
million with a termination date of no earlier than January 2026,
subject to usual covenants. The MUFG commitment was $300 million
and the Credit Suisse commitment was $300 million.
Amounts borrowed against the Facility accrue interest at an
aggregate rate of the LIBOR/EURIBOR, a margin, and, under certain
circumstances, a mandatory minimum cost. The Facility is secured by
the private equity investments and cash and equivalents of the
Company, as defined in the agreement. Availability of funds under
the Facility and interim repayments of amounts borrowed are subject
to certain loan-to-value ratios and portfolio diversity tests
applied to the Investment Portfolio of the Company. At 31 July 2019
and 31 January 2019, there was no debt outstanding against the
Facility. In the period ended 31 July 2019, the Facility had a
drawdown of $30 million for a brief period for cash management
purposes. For the period ended 31 July 2019, interest of $16,973
was incurred in relation to this borrowing and is included as other
expenses in the Unaudited Condensed Interim Consolidated Statements
of Operations. There was no interest incurred during the period
ended 31 July 2018. Included in other assets at 31 July 2019 and 31
January 2019 are deferred financing costs of $8,649,699 and
$9,264,606, respectively, related to refinancing the Facility. The
deferred financing costs are amortised on the terms of the
Facility. The Company is required to pay a non-utilisation fee
calculated as 115 basis points per annum from 23 December 2016 to 2
January 2019. Beginning 3 January 2019, the non-utilisation fee for
the Credit Suisse commitment is 100 basis points per annum, and the
non-utilisation fee for the MUFG commitment is 90 basis points per
annum. For the periods ended 31 July 2019 and 2018, $2,935,360 and
$2,890,972, respectively, in non-utilisation fees have been
incurred.
Note 7 Financial Highlights
For the Six-month Periods Ended 31 July 2019 and 2018
2019 2018
------------------------------------- --------- ---------
Shares
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period 24.09 21.46
Net realised and unrealised gains 1.78 1.52
Net operating expenses (0.07) (0.05)
------------------------------------- --------- ---------
Total from investment operations 1.71 1.47
Net asset value, end of period $25.80 $22.93
Market value, end of period $21.50(1) $17.06(2)
Total return at net asset value 7.1% 6.8%
Total return at market value 14.7% (4.0%)
------------------------------------- --------- ---------
RATIOS TO AVERAGE NET ASSETS
Expenses(3) 0.32% 0.35%
------------------------------------- --------- ---------
Net operating expenses (0.27%) (0.24%)
------------------------------------- --------- ---------
PORTFOLIO TURNOVER(4) 0.0% 0.0%
------------------------------------- --------- ---------
1 A US dollar share price quote ("HVPD") was introduced in
December 2018. The $21.50 represents the US dollar closing share
price at 31 July 2019. If the sterling share price equivalent of
GBP17.20 is converted at the prevailing exchange rate, similar to
the comparison period, the converted share price is $20.91 and the
return at market value on the converted share price is 11.9%.
2 Represents converted share price of GBP13.00 at 31 July 2018.
3 Does not include operating expenses of underlying investments.
4 The turnover ratio has been calculated as the number of
transactions divided by the average net assets.
Note 8 Publication and Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets
less its total liabilities. The NAV per share is calculated by
dividing the NAV by the number of shares in issue on that day. The
Company publishes the NAV per share of the shares as calculated,
monthly in arrears, at each month end, generally within 20
days.
Note 9 Related Party Transactions
Other amounts payable to HarbourVest Advisers L.P. of $92,427
and $138,563 represent expenses of the Company incurred in the
ordinary course of business, which have been paid by and are
reimbursable to HarbourVest Advisers L.P. at 31 July 2019 and 31
January 2019, respectively.
Board-related expenses, primarily compensation, of $278,582 and
$308,997 were incurred during the periods ended 31 July 2019 and
2018, respectively.
Note 10 Indemnifications
General Indemnifications
In the normal course of business, the Company may enter into
contracts that contain a variety of representations and warranties
and which provide for general indemnifications. The Company's
maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Company that
have not yet occurred. Based on the prior experience of the
Investment Manager, the Company expects the risk of loss under
these indemnifications to be remote.
Investment Manager Indemnifications
Consistent with standard business practices in the normal course
of business, the Company has provided general indemnifications to
the Investment Manager, any affiliate of the Investment Manager,
and any person acting on behalf of the Investment Manager or such
affiliate when they act in good faith, in the best interest of the
Company. The Company is unable to develop an estimate of the
maximum potential amount of future payments that could potentially
result from any hypothetical future claim, but expects the risk of
having to make any payments under these general business
indemnifications to be remote.
Directors and Officers Indemnifications
The Company's Articles of Incorporation provide that the
Directors, managers, or other officers of the Company shall be
fully indemnified by the Company from and against all actions,
expenses, and liabilities which they may incur by reason of any
contract entered into or any act in or about the execution of their
offices, except such (if any) as they shall incur by or through
their own negligence, default, breach of duty, or breach of trust,
respectively.
Note 11 Subsequent Events
In the preparation of the financial statements, the Company has
evaluated the effects, if any, of events occurring between 31 July
2019 and 22 October 2019, the date that the financial statements
were issued.
On 1 August 2019, Edmond Warner joined the Board of Directors as
an Independent Non-executive Director.
On 27 September 2019, the Company committed $25 million to
HarbourVest Partners XI Micro Buyout Fund L.P. and $75 million to
HarbourVest Partners XI Venture Fund L.P.
There were no other events or material transactions subsequent
to 31 July 2019 that required recognition or disclosure in the
financial statements.
Disclosures
Investments
The companies represented within this report are provided for
illustrative purposes only, as example portfolio holdings. There
are over 9,000 individual companies in the HVPE portfolio, with no
one company comprising more than 3.4% of the entire portfolio.
The deal summaries, General Partners (managers), and/or
companies shown within the report are intended for illustrative
purposes only. While they may represent an actual investment or
relationship in the HVPE portfolio, there is no guarantee they will
remain in the portfolio in the future.
Past performance is no guarantee of future returns.
Forward-looking Statements
This report contains certain forward-looking statements.
Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not
historical facts. In some cases, forward-looking statements can be
identified by terms such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "potential",
"should", "will", and "would", or the negative of those terms, or
other comparable terminology. The forward-looking statements are
based on the Investment Manager's beliefs, assumptions, and
expectations of future performance and market developments, taking
into account all information currently available. These beliefs,
assumptions, and expectations can change as a result of many
possible events or factors, not all of which are known or are
within the Investment Manager's control. If a change occurs, the
Company's business, financial condition, liquidity, and results of
operations may vary materially from those expressed in
forward-looking statements.
By their nature, forward-looking statements involve known and
unknown risks and uncertainties because they relate to events, and
depend on circumstances, that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. Any forward-looking statements are only made as at the
date of this document, and the Investment Manager neither intends
nor assumes any obligation to update forward-looking statements set
forth in this document whether as a result of new information,
future events, or otherwise, except as required by law or other
applicable regulation.
In light of these risks, uncertainties, and assumptions, the
events described by any such forward-looking statements might not
occur. The Investment Manager qualifies any and all of its
forward-looking statements by these cautionary factors.
Please keep this cautionary note in mind while reading this
report.
Some of the factors that could cause actual results to vary from
those expressed in forward-looking statements include, but are not
limited to:
-- the factors described in this report;
-- the rate at which HVPE deploys its capital in investments and
achieves expected rates of return;
-- HarbourVest's ability to execute its investment strategy,
including through the identification of a sufficient number of
appropriate investments;
-- the ability of third-party managers of funds in which the
HarbourVest funds are invested and of funds in which the Company
may invest through parallel investments to execute their own
strategies and achieve intended returns;
-- the continuation of the Investment Manager as manager of the
Company's investments, the continued affiliation with HarbourVest
of its key investment professionals, and the continued willingness
of HarbourVest to sponsor the formation of and capital raising by,
and to manage, new private equity funds;
-- HVPE's financial condition and liquidity, including its
ability to access or obtain new sources of financing at attractive
rates in order to fund short-term liquidity needs in accordance
with the investment strategy and commitment policy;
-- changes in the values of, or returns on, investments that the
Company makes;
-- changes in financial markets, interest rates or industry,
general economic or political conditions; and
-- the general volatility of the capital markets and the market
price of HVPE's shares.
Publication and Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets
less its total liabilities. The NAV per share is calculated by
dividing the NAV of the Company by the number of shares in issue.
The Company intends to publish the estimated NAV per share as
calculated, monthly in arrears, as at each month end, generally
within 20 days.
Regulatory Information
HVPE is required to comply with the Listing, Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority in the
United Kingdom (the "LDGT Rules"). It is also authorised by the
Guernsey Financial Services Commission as an authorised closed-end
investment scheme under the Protection of Investors (Bailiwick of
Guernsey) Law, 1987, as amended (the "POI Law"). HVPE is subject to
certain ongoing requirements under the LDGT Rules and the POI Law
and certain rules promulgated thereunder relating to the disclosure
of certain information to investors, including the publication of
annual and half-yearly financial reports.
Valuation Policy
Valuations Represent Fair Value Under US GAAP
HVPE's 31 July 2019 NAV is based on the 30 June 2019 NAV of each
HarbourVest fund, Absolute,(1) and Conversus, adjusted for changes
in the value of public securities, foreign currency, known material
events, cash flows, and operating expenses during July 2019. The
valuation of each HarbourVest fund is presented on a fair value
basis in accordance with US generally accepted accounting
principles ("US GAAP"). See Note 4 in the Notes to the Unaudited
Condensed Interim Consolidated Financial Statements on page 49.
The Investment Manager typically obtains financial information
from 90% or more of the underlying investments for each of HVPE's
HarbourVest funds to calculate the NAV. For each fund, the
accounting team reconciles investments, distributions, and
unrealised/realised gains and losses to the financial statements.
The team also reviews underlying partnership valuation
policies.
Management of Foreign Currency Exposure
The Investment Portfolio includes three euro-denominated
HarbourVest funds and a Canadian dollar-denominated fund.
-- 16.1% of underlying portfolio holdings are denominated in
euros. The euro-denominated Investment Pipeline is EUR29
million.
-- 1.8% of underlying portfolio holdings are denominated in
sterling. There is no sterling-denominated Investment Pipeline.
-- 1.5% of underlying portfolio holdings are denominated in
Australian dollars. There is no Australian dollar-denominated
Investment Pipeline.
-- 0.6% of underlying portfolio holdings are denominated in
Swiss Francs. There is no Swiss Franc-denominated Investment
Pipeline.
-- 0.4% of underlying portfolio holdings are denominated in
Canadian dollars. The Canadian dollar-denominated Investment
Pipeline is C$16 million.
HVPE has exposure to foreign currency movement through foreign
currency-denominated assets within the Investment Portfolio and
through its Investment Pipeline of unfunded commitments, which are
long term in nature. The Company's most significant currency
exposure is to euros. The Company does not actively use
derivatives
or other products to hedge the currency exposure.
1 Absolute, referred to as "HVPE Avalon Co-Investment L.P." in
the Unaudited Condensed Interim Consolidated Schedule of
Investments, has been fully realised. However, $505,610 remains in
escrow.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFLRIDLFFIA
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