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HarbourVest Partners closes mezzanine co-investment and real assets funds

HarbourVest Partners, a global private markets asset manager, has held the final closes of its first mezzanine-focused co-investment fund at USD375 million and its third real assets fund at USD366 million.

“Specialised programmes such as our mezzanine and real assets funds demonstrate our continued emphasis on offering solutions that help our clients invest in niche strategies and markets that are difficult to access,” says John Toomey, managing director, HarbourVest.
 
“HarbourVest’s growth in real assets and expansion into private credit further broadens the reach of our solutions and our ability to meet and anticipate client needs. We are particularly proud that half of the limited partners in these funds are new to HarbourVest, demonstrating that these offerings are consistent with our strategic plan to grow our client base.” 
  
Mezzanine Income Fund I was oversubscribed and closed above its USD250 million target at its hard cap of USD375 million.
 
“HarbourVest has been investing in mezzanine since 2003, and over the last decade we’ve seen consistent growth in the demand from private equity sponsors for mezzanine debt partners to help complete transactions,” says Peter Lipson, managing director, HarbourVest. “Our dedicated mezzanine debt solution will continue to differentiate HarbourVest as a preferred partner to GPs, while being highly complementary to our direct co-investment equity business—particularly in terms of accessing and evaluating deals.”
 
HarbourVest’s approach to the mezzanine market enables investors to access companies primarily in the US lower middle market—and across some of the very best managers who invest in this area. This access is achieved via a differentiated mezzanine-equity strategy.
 
“What differentiates HarbourVest is our strong equity orientation, which brings with it a unique way of looking at mezzanine and engaging with GPs. Our roots in equity allow us to be more agile in terms of how we structure deals. It also better aligns us with the sponsor and makes us a more valued mezzanine partner,” says Lipson.
  
Real Assets Fund III is HarbourVest’s first commingled real assets fund and closed above its USD300 million target at USD366 million. The strategy of the fund is to leverage the firm’s Dover Street secondary investment approach and apply it to the less competitive but fast-growing real assets market with the objective to invest opportunistically across the energy, power, infrastructure, and natural resources sectors.
 
“The real assets market has gone from a niche component of the broader secondary market to reach a level of maturity where it is now sizeable enough to be viewed as a segment standing on its own. The dynamics of this early stage maturity is comparable to the early days of the PE secondary market itself, where the growth in the demand for liquidity continues to lag the availability of capital to provide it. In addition, as the market continues to mature we are seeing more GP spinout and GP-led transactions trickle into the space,” says Kevin Warn-Schindel, managing director, HarbourVest. “Complex transactions are fairly new to the real assets market and GPs are looking for two main traits in a partner—a long pedigree of executing on these types of deals, and a thorough understanding of the underlying businesses in which they’re investing. We check both boxes with confidence.”
 
Limited partners in both funds, more than half of which are new to HarbourVest, consist of pension funds, insurance companies, endowments and family offices across the US, Canada, Latin America, Asia and Europe.

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