Investment trust insider on HarbourVest Global Private Equity – James Carthew: I bought HarbourVest because its discount is far too wide
HarbourVest Global Private Equity languishes on a 42% share price discount, which ignores several positive features of the £1.7bn portfolio
I said two weeks ago I was thinking about buying shares in another undervalued private equity investment company. In the end, I opted for HarbourVest Global Private Equity (HVPE). The reason was pretty straightforward – I think it is on far too wide a discount.
Since the company’s shares first listed in London in 2010, the narrowest the discount reached was about 9.5% in January 2020, although the valuation gap soon ballooned to over 51% thanks to the Covid panic.
The shares subsequently recovered to trade around 25% below net asset value (NAV) for a couple of years – but the discount widened again over 2022 as interest rates rose and hit its widest-ever level of 52% in March last year.
HVPE’s valuation matters as, ignoring 3i Group (III), it is the second-largest company in the private equity sector with a market capitalisation of £1.7bn behind £2.3bn HgCapital Trust (HGT) – and, as such, helps set the tone for where discounts ‘should’ be for listed private equity funds.
While HGT already trades on a narrow discount, and the next largest trusts – Pantheon International (PIN), Oakley Capital Investments (OCI), and Patria Private Equity (PPET) have all put effort into narrowing their discounts with some success, HVPE’s discount has been… read more here