The estimated economic net asset value (NAV of HarbourVest Global Private Equity Limited (HVPE), was USD829.4m or USD9.99 per share, as as at 28 February 2011. This figure represents a 2.5% increase from the 31 January 2011 estimated Economic NAV per share of USD9.75.
The change was driven by increases in value for privately-held companies, as a portion of direct and fund-of-fund holdings were revalued to reflect final 31 December 2010 results (approximately USD0.15 per share); increases in the value of publicly-traded holdings to 28 February (USD0.06 per share); and foreign currency movement (USD0.05 per share). The gains were partially offset by ongoing operating expenses (USD0.02 per share). Some final valuations increased from the year-end estimate as additional company information became available. The value of the remaining direct and fund-of-funds holdings continues to reflect the investment manager’s preliminary estimate of year-end 2010 valuations.
Over the last year, HVPE has continued to make progress in enhancing its NAV per share on both an absolute and relative basis, and USD11 million of positive cash flow was generated in the financial year ended 31 January 2011. Assuming continued economic and public market recovery, the investment manager expects these trends to continue and anticipates increasingly positive cash flows to be generated from HVPE’s mature portfolio.
The investment manager does not believe that these positive trends are appropriately reflected in HVPE’s share price, which continues to trade at a substantial discount to NAV. Therefore, from an investment perspective, HVPE’s Board and the investment manager intend to allocate capital towards a programme of opportunistic share buybacks, which, if invested, are expected to be beneficial to shareholders and accretive to NAV per share. On an ongoing basis, the Company may invest in its existing portfolio through share buybacks during periods when valuations are compelling, as well as make new commitments to HarbourVest funds and parallel investments.
In February 2011, HVPE funded USD8.3 million of capital calls to US and international fund-of-funds, the global secondary fund, and a direct fund (compared to USD5.0 million in January). The Company received USD5.9 million in distributions, resulting in net negative cash flows of USD2.4 million.
Liquidity events continued across HVPE’s underlying portfolio during February 2011 with 28 transactions. Ten underlying companies completed IPOs during the month, including Kinder Morgan, Inc (NYSE: KMI), which surpassed the size of the January IPO of The Nielsen Company to measure among the largest private equity-backed offerings in US history. A total of 18 portfolio companies completed sale transactions during the month.
