Net Asset Value(s)

RNS Number : 0936K

HarbourVest Global Priv. Equity Ltd

20 April 2020

 

 

20 April 2020

HVPE ESTIMATED NAV PER SHARE UPDATE FOR MARCH 2020

· Estimated NAV of $27.02 (£21.74) per share, broadly flat for March

o Reflects predominantly 31 December 2019 valuations

· $50 million committed to a HarbourVest global secondary fund

· Net investor during month with a net $55 million invested

· Statement by the Board and the Investment Manager to Shareholders on cash flow and valuations

HarbourVest Global Private Equity Limited ("HVPE" or the "Company"), a closed-end investment company, today announces its estimated Net Asset Value ("NAV") at 31 March 2020.

HVPE provides a complete private equity solution for public investors, managing the portfolio through four phases of the private equity cycle to create value: Commitments, Investment, Growth, and Realisation.

Commitments

During March, HVPE made an additional commitment of $50.0 million to the most recent HarbourVest-managed global secondary fund (now $150.0 million in total).

HVPE's Investment Pipeline (unfunded commitments) decreased on a net basis by $23.4 million during March based on capital funded and foreign exchange rate movement.

Investment

During March, HVPE invested $72.8 million in HarbourVest funds (compared to $17.9 million in February). The largest investment was made to the latest HarbourVest US-focused buyout fund-of-funds.

Growth

At 31 March 2020, HVPE's estimated NAV per share was $27.02 (£21.74), compared to the 29 February 2020 estimate of $26.92 (£20.99).

It is important to note that the 31 March 2020 NAV reflects predominantly 31 December 2019 valuations, and in most instances does not reflect the impacts of COVID-19 on the underlying portfolio companies. The valuation breakdown of the HVPE portfolio as reported here is as follows: 9% actual 31 March 2020 (representing the public companies in the portfolio); 80% actual 31 December 2019; and 11% estimated 31 December 2019. Consistent with previous estimated NAV reports, valuations are also adjusted for foreign exchange movements, cashflows, and any known material events to 31 March 2020.

Realisation

HVPE received $17.9 million of distributions from HarbourVest funds during March 2020, compared to $32.1 million in February 2020. The largest source of distributions in the month was a 2015 vintage global multi-strategy fund-of-funds. During March, there were a total of 18 liquidity events across HVPE's underlying portfolio compared to February's 23 events, and a last 12-month average of 26.

Balance Sheet and Credit Facility

At 31 March 2020, HVPE had no drawings on its credit facility. Borrowing at the HarbourVest fund level amounted to $359.0 million. HVPE's cash ($89.3 million) and available credit ($600.0 million) totalled $689.3 million.

As detailed in the statement below, on 9 April 2020, HVPE provided notice to its lenders

Credit Suisse and Mitsubishi UFJ to draw down $200.0 million of the $600.0 million credit facility.

Additional detail about HVPE's NAV and investment diversification can be found on HVPE's website, in the Monthly Update for 31 March 2020 .

Statement by the Board and the Investment Manager to Shareholders on cash flow and valuations

Further to the 20 March 2020 statement on the subject of COVID-19, the Board and the Investment Manager would like to provide an update on actions taken in recent weeks to manage the consequences for HVPE and its portfolio of the widespread social and economic restrictions currently in place in many countries around the globe.

As might be expected in the current environment, during March HVPE funded $72.8 million of capital calls, and received $17.9 million of cash from distributions in the period. Data for the first two weeks of April indicate that this negative cash flow trend is continuing, and the Board and Investment Manager believe it prudent to plan for this to continue through at least the end of Q2.

Credit facility

Shareholders will be aware that HVPE has a fully committed revolving $600 million credit facility in place, through January 2026, in order to manage periods of negative cash flow. Having reviewed an updated forecast presented by the Investment Manager, the Board has decided to initiate a draw of $200 million on the facility. Events in the markets and the wider economy are developing very quickly, and a company such as HVPE, with its closed-ended balance sheet, must ensure that it has sufficient resources available at short notice to meet its obligations.

Following the initiation of this $200 million draw on the facility, HVPE has access to the remaining $400 million available and therefore retains the flexibility to react as required to the evolving situation driven by COVID-19. In utilising HVPE's credit facility, the Board is confident that HVPE will be well-placed to continue investing as planned through the difficult times ahead, supporting its underlying managers and portfolio companies, and, when the skies are clearer, to capitalise on new opportunities during the recovery phase.

Portfolio valuations

In our 20 March 2020 statement, the Board and the Investment Manager indicated that "the consequences of the declines in public markets, and the broader impact of COVID-19 on the real economy, are expected to weigh materially on HVPE's NAV in the months ahead." Due to the valuation time lags inherent in private markets and in HVPE's structure, the updated NAV report for the month ending 31 March is still based predominantly on underlying valuations at 31 December 2019 which will not have captured the impact of COVID-19. In light of recent events, however, the Investment Manager has embarked on an ongoing bottom-up assessment of the likely impact on HVPE's portfolio. So far, the Investment Manager has indicated that it expects current market trading multiple declines, together with slowing global demand and decreasing commodity prices, to have an impact on valuations in the near term. This effect will be felt in HVPE's NAV per share as Q1 valuations are received from underlying portfolio managers over the following three months. Furthermore, it is likely that some of HVPE's underlying portfolio companies will, in the months ahead, report a reduction in revenue and/or earnings, and this would be expected to weigh further on the Q2 valuations. We should anticipate, therefore, that the decline in HVPE's NAV per share will be drawn out over a period of some months, notwithstanding any benefit from the recent partial rebound in the public markets.

In the Global Financial Crisis of 2008-9, HVPE's total NAV per share decline from peak (31 May 2008) to trough (28 February 2009) was approximately 29%. This compared favourably on a relative basis to the 60% decline in the FTSE All World* and the 57% fall in the S&P 500*. We cannot be sure that the current crisis will result in a similarly moderated relative NAV impact, but we might reasonably expect that HVPE's well-diversified global portfolio, comprising as it does a host of disparate investments covering numerous strategies, stages, vintages and sectors, should be better-placed than many to weather the current storm. Indeed, the Company's relatively large technology-focused venture portfolio may enable it to benefit to some degree from the accelerated trend toward remote living and working catalysed by the current crisis, while HVPE's investments in the healthcare and biotech industries may contribute to efforts to help ensure that the world is better prepared for any future pandemic.

Share price and directors' dealings

The recent partial recovery in the Company's share price is a welcome development, and the Board would like to reiterate its appreciation of the ongoing support provided to the Company by all its Shareholders. All the directors are shareholders themselves and two have added to their holdings in recent weeks, as have several employees of the Investment Manager.

Outlook

Private markets investing must be viewed as a long-term commitment and further volatility is anticipated as events continue to unfold. However, the directors have confidence that the prudent steps taken in recent years to support HVPE's balance sheet and ensure access to liquidity during the current downturn, together with the Investment Manager's almost 40 years' experience investing through private markets cycles, mean that the Company is well-placed to continue on the same path begun at the IPO in 2007, delivering NAV per share growth materially in excess of the public markets over time.

The HVPE team is here to discuss any questions you may have, so please do not hesitate to contact Richard Hickman or Charlotte Edgar using the contact details below.

Michael Bunbury - Chairman of HarbourVest Global Private Equity

Peter Wilson - Managing Director, HarbourVest Partners, and Director of HarbourVest Global Private Equity

*The S&P 500 declined by 57% from 9 October 2007 to 9 March 2009, while the FTSE All World Index declined by 60% from 31 October 2007 to 9 March 2009.

Enquiries:

Shareholders
Richard Hickman	Tel: [phone]	[e-mail]
Charlotte Edgar	Tel: [phone]	[e-mail]
Media
HarbourVest Partners
Alicia Sweeney	Tel: [phone]	[e-mail]
MHP Communications
Charlie Barker / Tim Rowntree	Tel: [phone]	[e-mail]

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 over 35 years of experience and more than $68 billion in assets under management, as of December 31, 2019. 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 600 employees, including more than 125 investment professionals across Asia, Europe, and the Americas. This global team has committed more than $40 billion to newly-formed funds, completed over $24 billion in secondary purchases, and invested over $17 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

© 2020 HarbourVest Global Private Equity Limited. All rights reserved.

 

END

 

 

NAVBUGDSGBBDGGR