HarbourVest Global Private Equity (HVPE) is to take a direct stake of approximately USD95m, and also have an interest of approximately USD12m through other existing commitments to HarbourVest managed funds, in the assets of Conversus Capital.
This transaction is expected to add approximately USD0.20 to HVPE’s NAV per share.
Conversus, like HVPE, is a listed private equity fund and is the largest publicly-traded portfolio of third party private equity funds globally, with a mature, broadly diversified portfolio of over 200 private equity fund interests. In July 2012, HarbourVest Partners announced a definitive agreement, through an acquisition vehicle, to acquire Conversus’s portfolio of private equity fund interests and direct co-investments for USD1.4bn. The underlying portfolio is diversified by vintage, geography, and industry and will thus complement HVPE’s diversified portfolio.
The company’s investment will be held through an acquisition vehicle and will be financed through the use of HVPE’s existing USD500m credit facility. HVPE’s strong balance sheet enables HVPE to participate in opportunistic situations at a low cost of finance. Pro forma debt will rise to approximately USD195m and gearing to 20 per cent following completion the transaction. This level is similar to the high point in September 2011 following the success of the Absolute Private Equity take private transaction.
The company’s mature portfolio with 50 per cent pre-2007 investments has generated USD96m of gross realisations in the last 12 months and reduced gearing to eight per cent and net debt to USD81m. Over the past 12 months, HVPE has also made USD110m of new commitments.
As the chairman of the board noted in HVPE’s interim accounts the company is progressing discussions to extend the current facility beyond its maturity in December 2014, and the company expects to make a further announcement in due course.