HarbourVest Private Equity says it will change the way it invests – moving from investing through HarbourVest Partners’ co-mingled funds to direct investments in third party funds, secondary opportunities and co-investments – a ‘separately managed account’.
The transition to the new structure will be gradual as new commitments are invested this way, while the existing portfolio of HarbourVest funds will continue to operate as before.
The board believes the simplified structure will deliver the following key benefits:
- Improved flexibility: the trust will have increased influence on the timing and mechanics of liquidity events in the portfolio. For example, it could ask the manager to explore a sale of underlying assets via the secondary market should the board believe this to be in the best interests of shareholders as a whole.
- Reduced overall debt: borrowing at the HarbourVest fund level is expected to decline materially over time as the funds in the existing portfolio mature and pay down debt. In addition, the pipeline of unfunded commitments to HarbourVest funds is also expected to decline, leading to more predictable cash flows and a reduced need for borrowing at the trust level.
- Competitive management fee: there will be no expected increase in the level of HarbourVest Partners’ fees, despite the more tailored nature of the new structure. The proposed management fee is 60 basis points (0.6%) on NAV, which is no greater than the current effective blended management fee rate incurred on the existing portfolio of HarbourVest funds (equivalent to 62 basis points in the year ending 31 January 2025). HarbourVest will charge carried interest at the same level as it does on comparable co-mingled funds. More detail will follow in HVPE’s upcoming annual report.
- Exclusive access: HVPE will continue to benefit from first-in-line allocation to high-quality investment opportunities within the manager’s stable. As a result, HVPE will continue to provide public market investors with access to a broad range of attractive private markets opportunities through HarbourVest Partners.
HVPE : HarbourVest adopting a more simple structure
