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Stronger sterling depresses HarbourVest’s returns

Harbourvest Global Private Equity US dollar quote

Stronger sterling depresses Harbourvest’s returns – HarbourVest Global Private Equity Limited has reported 16.2% NAV growth to $21.46 from $18.47 over the year to 31 January 2018. 55% of HVPE’s assets consist directly of US investments and a further 23% of assets are denominated in US dollars. In the year to 31 January 2018, sterling made a significant recovery after the shock of the UK Referendum in June 2016. In addition, the US dollar was going through a weak period with the trade weighted index of the currency depreciating by approximately 8.2% during the year. Against sterling the US dollar moved from $1.258 to $1.419, or an appreciation of sterling by 12.8% which depressed the NAV per share when viewed in sterling. Consequently, notwithstanding the substantial double-digit growth of NAV per share in US dollars, in sterling terms that NAV per share grew by a modest 3.0%. HVPE’s share price rose by 4.8% to £12.52.

Highlights

  • $340m committed to new HarbourVest funds (2017: $425m)
  • As at 31 January 2018, $1.2bn yet-to-be funded commitments
  • Positive net cash flow trend over year:
  • $405.1m distributions received (2017: $251.0m)
  • $312.7m invested (2017: $270m)
  • Significant exits from top 20 companies, including Lightower Fiber Networks, HVPE’s largest portfolio company at 31 January 2017
  • $249m value growth from investment portfolio (2017: $148m)

Post year-end, strategic asset allocation targets revised:

  • Allocation for Real Assets and Mezzanine investments increased from 5% to 10%;
  • Buyouts reduced from 65% to 60%
  • Allocation to Direct Co-investments increased from 15% to 20%;
  • allocation to Primaries reduced from 60% from 55%

Sir Michael Bunbury, chairman, said: “I am pleased to report another year of significant progress for HVPE, with double-digit NAV per share growth in the Company’s functional currency, the US dollar, making this the Company’s ninth consecutive year of positive NAV returns. During the financial year HVPE celebrated its tenth anniversary, having built a solid 10-year track record of strong and consistent returns for its shareholders via unique access to HarbourVest funds and a well-managed, diversified portfolio. HVPE has become one of the few diversified listed private equity companies with the liquidity and scale sufficient to be readily available for investment by all classes of shareholders, and I would like to welcome those new investors who purchased shares during the year.

With the $500 million credit facility successfully renegotiated during the financial year and extended out to December 2022, we look forward to the future with the confidence that the Company is underpinned by a strong balance sheet and that investment in private market assets will continue to deliver superior long-term returns.”

HVPE : Stronger sterling depresses Harbourvest’s returns

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