Activist investment firm Metage Capital has called on HarbourVest Global Private Equity (HVPE) to either introduce quarterly tender offers to address its significant share price discount or liquidate its £3.4bn ($4.3bn) portfolio, according to a report by CityWire.
The demand, outlined in an open letter to shareholders, comes as HVPE struggles to bridge the gap between its share price and net asset value (NAV).
Metage’s Chief Investment Officer, Tom Sharp, criticised HVPE’s performance under board chair Ed Warner, highlighting the widening discount on its shares. By the end of October, the shares traded at a 45% discount to NAV — significantly worse than comparable peers CT Private Equity (32%) and Pantheon International (35%). Despite narrowing slightly to 40% recently, the discount has effectively doubled during Warner’s four-year tenure.
Sharp emphasised the potential value unlocked if the discount were eliminated, stating it could generate £1.3bn for shareholders. Metage, which holds 0.9% of HVPE shares, believes the board’s existing strategy, including a pool for share buybacks funded by 15% of asset sales, has proven inadequate.
Sharp has urged HVPE to align with the structure of its stablemate fund, the HarbourVest Global Private Solution (HGPS), launched in Luxembourg last year, which allows investors to redeem 5% of their holdings at NAV every quarter, ensuring full exit liquidity within five years, an approach it says prevents the fund from trading at a discount.
Sharp recommended that HVPE adopt a similar model by halting new commitments to HarbourVest funds and divesting existing stakes to return capital to shareholders. If this transition proves unfeasible, Sharp argued the fund should be liquidated entirely to eliminate the persistent discount.
Despite delivering a 214% shareholder return over the past decade, far outperforming the FTSE All-Share’s 81%, HVPE lags the 220% return of the MSCI World index. The underlying return of 306% from its private equity investments starkly contrasts with the diluted shareholder return, leaving a 92% shortfall due to the share price discount.
Sharp also took aim at HarbourVest’s policy of reinvesting at least 85% of cash flows into new commitments, citing data from Peter Wilson, a managing director at HarbourVest, showing that the group’s private equity funds often trade below NAV on secondary markets, making these investments less attractive than direct stakes in high-quality private equity funds.
Metage’s letter adds to pressure from other activist shareholders, including Active Value Investors (2.3% ownership) and Quilter Investors (1.3%), who have previously pushed for governance reforms and better capital allocation.
