TIDMHVPE
RNS Number : 6924G
HarbourVest Global Priv. Equity Ltd
27 November 2020
27 November 2020
RESULTS FOR THE SIX MONTHSED 31 JULY 2020
Resilient net asset value ("NAV") performance
HarbourVest Global Private Equity Limited ("HVPE" or the
"Company"), today announces its unaudited results for the
six-months ended 31 July 2020.
Highlights - Six months to 31 July 2020
-- Increase in NAV per share of 2.2% to $28.18 (31 January 2020: $27.58)
o Outperformance of FTSE All World Total Return Index by 2.3%
over period
o Opportunistic secondary co-investment transaction was largest
single-fund contributor to NAV per share growth
o $54.6m net gain on investments (2019: $141.7m)
o Underpinned by resilient sector exposures and rebound in
public markets
-- Net investor during the period. Distributions driven by venture strategies
o $214.2m cash invested (2019: $202.4m)
o $78.7m distributions received (2019: $138.9m), the majority
from venture-backed companies, many in the technology and
healthcare sectors
o Largest distribution from partial sale of shares in TeamViewer
following IPO
o Significant proceeds also received from Knowlton Development
Corporation, Lytx and Saba Software
-- Decisive and prudent action taken in response to COVID-19
o Bottom up portfolio risk assessment undertaken
o Balance sheet scenarios revisited
o $200.0m draw on the credit facility in April; $80.0m repaid in
July
o Commitment plan placed temporarily on hold
-- Sufficient liquidity to support investment pipeline and new opportunities
o Cash balance of $109.8m at period end. $480.0m available on
$600.0m credit facility
Encouraging trends post period end despite ongoing
uncertainty
-- NAV per share $28.60 at 31 October, a 1.5% increase from 31 July 2020
-- Updated portfolio risk assessment shows 83% of companies
experiencing "moderate to limited" impact as a result of
COVID-19
-- Improved cashflow profile, with distributions outperforming
initial expectations although remaining below pre-COVID-19
levels
-- Commitment plan recommenced
Ed Warner, Chair of HVPE, said:
"I am pleased to report that HVPE's NAV per share increased by
2.2% in the first six months of the year in spite of significant
headwinds. This reflects the expertise of our Investment Manager
and the resilience of HVPE's portfolio through the HarbourVest
platform.
"We hope shareholders have been reassured by the decisive
actions we have taken to navigate through the challenging
conditions created by COVID-19. While we remain alert to the
likelihood that the pandemic will remain a cloud over the global
economy for some time yet, the calibre of our investments, strength
of our balance sheet, current structure of the portfolio and
commitments, together provide a firm basis from which to view the
future with confidence."
Investor Event
There will be a presentation for institutional and retail
investors on 4 December 2020 at 10am GMT. To receive registration
details for the event, please contact Liah Zusman:
hvpeevents@harbourvest.com .
Semi-Annual Report and Accounts
To view the Company's Semi-Annual Report and Accounts please
follow this link: Semi-Annual Report - Six Months to 31 July 2020 .
Page number references in this announcement refer to pages in this
report. The Semi-Annual Report and Accounts will also shortly be
available on the National Storage Mechanism, which is located at
www.morningstar.co.uk/uk/nsm .
Semi-Annual Results Presentation
HVPE will publish a new presentation on its website to
supplement the publication of the Semi-Annual Results for the six
months ended 31 July 2020. The presentation will be publicly
disclosed at 11am today. All stakeholders will be able to view and
download the presentation from HVPE's website: www.hvpe.com .
Enquiries:
Shareholders
Richard Hickman Tel: +44 (0)20 7399 rhickman@harbourvest.com
9847
Charlotte Edgar Tel: +44 (0)20 7399 cedgar@harbourvest.com
9826
Media
MHP Communications
Charlie Barker / Tel: +44(0)20 3128 hvpe@mhpc.com
Tim Rowntree / Pete 8570
Lambie
HarbourVest Partners
Alicia Sweeney Tel: +1 (617) 807 acurransweeney@harbourvest.com
2945
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 $69 billion
in assets under management, as of June 30, 2020. 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 145
investment professionals across Asia, Europe, and the Americas.
This global team has committed more than $42 billion to
newly-formed funds, completed over $25 billion in secondary
purchases, and invested over $18 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.
Epidemics, Pandemics and Other Health Risks - Many countries
have experienced infectious illnesses in recent decades, including
swine flu, avian influenza, SARS and 2019-nCoV (the "Coronavirus").
In December 2019, an initial outbreak of the Coronavirus was
reported in Hubei, China. Since then, a large and growing number of
cases have been confirmed around the world. The Coronavirus
outbreak has resulted in numerous deaths and the imposition of both
local and more widespread "work from home" and other quarantine
measures, border closures and other travel restrictions causing
social unrest and commercial disruption on a global scale. The
World Health Organization has declared the Coronavirus outbreak a
pandemic. The ongoing spread of the Coronavirus has had and will
continue to have a material adverse impact on local economies in
the affected jurisdictions and also on the global economy as
cross-border commercial activity and market sentiment are
increasingly impacted by the outbreak and government and other
measures seeking to contain its spread. In addition to these
developments having potentially adverse consequences for underlying
portfolio investments of the HarbourVest funds and the value of the
investments therein, the operations of HVPE, the Investment
Manager, and HVPE's portfolio of HarbourVest funds have been, and
could continue to be, adversely impacted, including through
quarantine measures and travel restrictions imposed on personnel or
service providers based around the world, and any related health
issues of such personnel or service providers. Any of the foregoing
events could materially and adversely affect the Investment
Manager's ability to source, manage and divest its investments and
its ability to fulfil its investment objectives. Similar
consequences could arise with respect to other comparable
infectious diseases.
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 not
indicative of, or a guarantee of, future performance. The value of
an investment in the Company may fluctuate and share prices and
returns may go down as well as up. Prospective investors are
advised to seek expert legal, financial, tax and other professional
advice before making any investment decision.
This announcement is issued by the Company, whose registered
address is BNP Paribas House, St Julian's Avenue, St Peter Port,
Guernsey, GY1 1WA
(c) 2020 HarbourVest Global Private Equity Limited. All rights
reserved.
Chair's Statement
Dear Shareholder,
This is my first statement to shareholders as the new Chair of
HVPE, and I am pleased to report that in spite of the global
outbreak of coronavirus ("COVID-19"), the Company's NAV per share
increased by 2.2% in the first six months of the year. This return
reflects the expertise of the Investment Manager and, in turn, the
resilience of the underlying general partners and investee
companies to which HVPE has exposure through the HarbourVest
platform.
Financial Performance
While the $28.18 NAV per share at 31 July 2020 reflects a
positive return for HVPE, the six-month period saw much more
pronounced NAV fluctuations than usual because of COVID-19.
March-end valuations from the underlying managers declined, driven
by widespread uncertainty around the impact of the pandemic on the
economy and businesses, and against a backdrop of falling stock
markets worldwide. However, underpinned by resilient sectors such
as technology and healthcare, and alongside a rebound in public
markets, HVPE's NAV per share saw a strong return to growth on
receipt of Q2 valuations.
Although HVPE's NAV volatility has been much less severe than
that of the public markets, the Company's share price nevertheless
experienced a sharp fall mid-March, just weeks after reaching an
all-time high in sterling of GBP18.68. This created a substantial
widening of the discount to NAV, which reached 60% at its widest in
the period. This discount was very similar to that experienced in
the depths of the Global Financial Crisis ("GFC"), but thankfully
proved short-lived as market participants took advantage of the
opportunity to acquire HVPE shares at depressed levels.
At the half-year end, after a substantial rebound, HVPE's share
price had risen 66% from its March low to close at GBP15.28
($19.90). This marks a decline of 17% from the 31 January 2020
price of GBP18.36 ($24.15).
Balance Sheet
At the onset of the crisis, as detailed in HVPE's 2020 Annual
Report and Accounts, the Board acted swiftly to request a
reassessment of the Company's near-term financial projections from
the Investment Manager, which conducted an early and thorough
portfolio risk assessment exercise, the results of which fed into a
set of updated forecast scenarios. In anticipation of a likely
negative impact on cash flows, and to ensure HVPE was fully
prepared for a worst-case scenario, the Board drew on the Company's
$600.0 million credit facility (the "Facility"). In April a
drawdown of $200.0 million was initiated to ensure sufficient
near-term liquidity to address any potential cash flow imbalances.
As expected, distributions did slow markedly, while the elevated
capital calls from HarbourVest funds seen in March continued into
April, before moderating for the remainder of the reporting period.
HVPE's Facility was put in place as a back stop to cover any
periods such as this, enabling us to continue to invest through
downturns and to take advantage of attractive opportunities as they
arise. As cash flows began to recover, in July the Board approved a
partial repayment of $80.0 million. As at 31 July 2020, HVPE held
cash and cash equivalents of $109.8 million on its balance sheet,
with a balance of $120.0 million outstanding on the Facility.
Given the material economic uncertainty, the Board also took the
prudent step of temporarily pausing new commitments to HarbourVest
funds. This pre-emptive measure was intended to help alleviate any
risk of increased pressure on the balance sheet. It has since been
agreed to recommence the commitment plan. However, we should remind
shareholders that due to the Company's existing unfunded
commitments to HarbourVest funds, there has been consistent
deployment into investment opportunities, as evidenced by capital
calls through the period. The Board also agreed in May to
participate in a secondary co--investment transaction, made
available to HVPE as a result of existing commitments to
HarbourVest funds. This echoed events following the GFC, when HVPE
used its credit facility to invest alongside HarbourVest funds in
two prominent public to private transactions, both of which
delivered attractive returns to the Company.
Board Changes
At the AGM in July, Sir Michael Bunbury stood down as Chair,
having led the Board with distinction since HVPE's inception in
2007. On behalf of all shareholders I would like to thank him for
his immense contribution to the growth of the Company.
In planning for the retirement of other long-standing directors
over the next couple of years, we are very much alive to the
benefits the Board might gain from increasing further the diversity
of its members. The Board welcomes initiatives such as the
Hampton-Alexander Review, and will consider all aspects of
diversity as part of our succession planning.
Period Post HALF-Year End
Financial Performance
Since the half-year end, HVPE has published three NAV updates.
At 31 October, the NAV per share stood at $28.60, an increase of
1.5% from 31 July 2020. This is still largely based on 30 June 2020
valuations. The Board is encouraged by the improved cash flow
profile in recent months and the continued progress in the
underlying portfolio. A particularly strong contributor post period
came from a large software Initial Public Offering ("IPO"), and
provides an example of the opportunities that investment in HVPE
can provide exposure to. Alongside the value of the Company's
portfolio, the share price has also continued to recover, reaching
GBP17.24 as at 20 November 2020, an increase of 12.8% from 31 July
2020.
Portfolio Risk Assessment Update
The Recent Events section contains the results of an updated
portfolio risk assessment exercise on page 8. We remain encouraged
by the improved outcome, citing that the vast majority of companies
assessed (83%) fall into the "moderate to limited" impact
categories at October 2020, against 81% for the same data set in
April.
Update on ESG
As an increasingly important focus, we asked the Investment
Manager to provide an update on its ESG initiatives. The Board
remains encouraged by HarbourVest's heightened attention to ESG
issues in screening underlying managers. In addition, as part of
the Management Engagement and Service Provider Committee's annual
review, the Board now evaluates service providers on their approach
to ESG factors.
Outlook
The Directors recognise that this has been a challenging time
for many, and hope all HVPE's shareholders and stakeholders have
been reassured by the decisive actions taken by this Board on their
behalf, to navigate through the adversity to date. While the growth
in HVPE's NAV per share so far this year has been pleasing,
COVID-19 is likely to remain a cloud over the global economy for
some time yet. That said, the calibre of our investments, the
current structure of the portfolio and the Company's commitments,
together provide a firm basis from which to view the future with
confidence.
Ed Warner
26 November 2020
Investment Manager's Report
INTRODUCTORY NOTE
This report presents a summary of the Company's performance in
the six months to 31 July 2020. During this period, the
far-reaching impact of COVID-19 weighed on economic activity around
the world, and continues to do so at the time of writing.
In this report, disclosure is provided regarding the steps taken
by the Board and the Investment Manager to meet the ongoing
challenges arising from these adverse circumstances. More
specifically:
-- In this section, under Portfolio Performance below, an update
on performance over the reporting period with reference to the
impact of COVID-19 is provided.
-- Under Recent Events on page 8, the latest developments since
the half-year end, and position of the NAV per share, following
publication of the latest month-end estimate (31 October 2020), on
20 November 2020 are detailed.
-- Within the Period Since 31 July 2020 section on page 9 the
effect on HVPE's share price is considered.
-- Due to the material impact that COVID-19 has had on society
and the economy, and in turn, the Company, the Principal Risks and
Uncertainties section on pages 20 to 21 has been updated to reflect
any additional risks the Board has identified as a result of the
pandemic.
-- The assumption that the Company is and will continue to be a
Going Concern at the date of this report, as detailed in the
section on page 34, has been considered in light of COVID-19 and
has been supported by updated models provided by the Investment
Manager.
PORTFOLIO PERFORMANCE
NAV Per Share - Six Months to 31 July 2020
HVPE's portfolio generated a positive NAV per share return in
the six months to 31 July 2020. The Company's NAV per share
increased by 2.2% over the reporting period from $27.58 at 31
January 2020 to $28.18 at 31 July 2020.
Despite this solid half-year performance, it is important to
note that the onset of COVID-19 did lead to increased volatility in
HVPE's monthly estimated NAV per share performance throughout the
reporting period. In particular, the estimated NAV per share figure
at 30 June 2020 of $25.67, which largely reflected Q1 2020
valuations, represented a material decline from the audited 31
January 2020 NAV per share of $27.58. The subsequent receipt of Q2
2020 valuations, however, revealed strong gains across all
strategies as the global economy had staged a partial recovery.
These Q2 2020 valuations form the basis of the final 31 July 2020
NAV per share figure quoted in this report. Additionally, expenses
over the six-month period were more than offset by gains in foreign
currency.
Most major equity market indices ended the first half of the
calendar year broadly flat after strong, "V-shaped" recoveries
during the second quarter. HVPE's public market benchmark, the FTSE
AW TR Index (in US dollars), marginally decreased by 0.1% in the
six months to 31 July 2020. Although HVPE's NAV per share growth of
2.2% materially outperformed this over the period, public markets
tend to be more volatile especially during periods of uncertainty,
and therefore short-term comparisons are less meaningful.
Longer-term comparisons through the cycle are more reflective of
HVPE's relative performance; measured over the ten years to 31 July
2020, HVPE's NAV per share outperformed the FTSE AW TR Index by
2.6% on an annualised basis in US dollar terms (refer to the
Alternative Performance Measures on page 54 for this
calculation).
During the six months ended 31 July 2020 there was a $54.6
million net gain on investments, contributing to an overall
increase in net assets of $48.1 million. Of the $54.6 million, the
majority - 74% - came from unrealised growth within the portfolio.
This compares with a $141.7 million net gain on investments and
overall increase in net assets of $136.3 million for the six months
to 31 July 2019. The lower overall net gains in this reporting
period compared to the same period last year reflect the reduced
exit activity during the six months, and overall impact of COVID-19
on the portfolio.
In percentage terms, the Primary portfolio was the best
performing strategy, delivering value growth of 4.4% over the six
months. Geographically, the strongest gains came from the European
portfolio, which generated a value increase of 3.6%; this was
followed closely by the US assets, which returned 3.5%. In terms of
stage, Venture and Growth Equity was the strongest performer,
growing 8.1% over the six months ended 31 July 2020. More
information on the growth drivers can be found on page 25.
As at 31 July 2020, HVPE held investments in 49 HarbourVest
funds and eight secondary co--investments(1) (compared with 49 and
seven, respectively, at 31 January 2020). Of these, the largest
drivers of NAV per share growth during the six months to 31 July
2020 are described below:
-- Secondary Overflow IV was the largest contributor, adding
$0.16 to HVPE's NAV per share. This fund includes the June 2020
equity commitment to an attractive secondary deal made available to
HVPE as a result of its existing commitments to HarbourVest funds,
as detailed on page 12 of the Company's 2020 Annual Report and
Accounts. This growth was driven by unrealised gains generated by
revaluation and asset appreciation over the period.
-- Fund X Venture, a US-focused venture fund-of-funds, was the
second largest contributor adding $0.12 to NAV per share. This is a
2015 vintage fund in its growth phase. Most of this contribution
came from unrealised gains.
-- Following closely behind this was Co-Investment V, a global
direct co-investment fund, which added $0.10. This 2018 vintage
fund is currently in the investment phase. As might be expected at
this stage in the fund's life, most of this growth was derived from
unrealised gains.
-- Fund IX Venture, a 2011 vintage US-focused venture
fund-of-funds, also added $0.10 to NAV per share.
-- Dover X, a 2019 vintage global secondary fund, was the fifth
largest contributor, adding $0.08 to NAV per share over the
period.
1 These include five Secondary Overflow III investments, one
Secondary Overflow IV investment, and Absolute, referred to as
"HVPE Avalon Co-Investment L.P.", and Conversus, referred to as
"HVPE Charlotte Co-Investment L.P.", in the Unaudited Condensed
Interim Consolidated Schedule of Investments. Absolute has been
fully realised; however, $466,198 remains in escrow.
PORTFOLIO CASH FLOWS AND BALANCE SHEET
HVPE was a net investor in the six months to 31 July 2020,
following capital calls of $214.2 million into HarbourVest funds
(six months to 31 July 2019: $202.4 million) and cash distributions
of $78.7 million (six months to 31 July 2019: $138.9 million). This
resulted in $135.5 million net investment over the reporting
period, driven by elevated capital calls during March and April.
While this capital was deployed primarily into new opportunities,
part of the total was used to support existing investments and to
fund deals closed in the preceding months.
Elevated capital calls coincided with a sharp fall in
distributions beginning in April and May, with the result that HVPE
experienced significant cash outflow on a net basis. As a prudent
measure, on 9 April 2020, HVPE provided notice to its lenders,
Credit Suisse and Mitsubishi UFJ, to draw down $200.0 million from
the Company's $600.0 million Facility. Subsequently, based on an
updated cash flow analysis presented by the Investment Manager, the
Board approved an $80.0 million partial repayment. At 31 July 2020,
following this repayment, the Facility was $120.0 million drawn,
leaving HVPE with access to the remaining $480.0 million. Together
with the Company's cash balance, this large pool of available
liquidity ensures that HVPE retains the ability to meet its
unfunded commitments (the "Investment Pipeline") and allows for the
potential to capitalise on new opportunities as they arise.
Overall, net negative cash flow including operating expenses in the
period resulted in HVPE's cash balance declining from $130.6
million at 31 January 2020 to $109.8 million at 31 July 2020
(noting that the closing cash position includes the contribution
from the $120.0 million draw on the credit facility). As a
reminder, the Facility has a five-year evergreen structure. At the
outset it had an initial two-year no-notice provision, giving an
initial term of seven years to January 2026. From January 2021, the
lenders have the option to serve notice, but the notice given must
be a minimum of five years.
HVPE has indirect exposure, on a look-through basis, to a pro
rata share of borrowing carried on the balance sheets of some of
the HarbourVest funds (referred to as HarbourVest Partners ("HVP")
fund-level borrowing) in which HVPE is a Limited Partner ("LP"). It
is important to note that HVPE has no additional liability for
these borrowings beyond its uncalled commitments to each fund. The
majority of this fund-level borrowing represents delayed capital
calls, as a portion of the unfunded commitments has been invested
through the use of subscription credit lines at the fund level, but
the capital has not yet been called from HVPE.
At 31 July 2020, HVPE's share of HVP fund-level borrowing on a
look-through basis was $357.0 million, a net decrease of $9.8
million from $366.8 million at 31 January 2020. Expressed as a
percentage of NAV, the figure decreased from 16.7% to 15.9% over
the six-month period. In order to estimate the total potential
impact on NAV, an investor should take the total fund-level
borrowing figure of $357.0 million and factor in HVPE's net
cash/debt position at the Company level (net debt $10.2 million).
As at 31 July 2020, the resulting net total borrowing figure of
$367.2 million would translate to an approximate level of
look-through gearing of 16.3%. More detail on the HVP fund-level
borrowing, and how we factor this into our balance sheet
management, can be found under Managing the Balance Sheet on page
27 of the Company's 2020 Annual Report and Accounts. Further detail
on the Facility, and criteria upon which it can be drawn, can be
found under Note 6 Debt Facility on page 48 of the Unaudited
Condensed Interim Consolidated Financial Statements.
In the reporting period, the largest HarbourVest fund capital
call ($31.5 million) came from Fund XI Buyout, a 2018 vintage
US-focused buyout fund-of-funds. Other large capital calls
originated from Co-Investment V ($30.0 million) and Fund XI Venture
($25.7 million), both 2018 vintage funds currently in the
investment phase and building out their portfolios. Following these
were calls to fund investment activity from Fund X Buyout ($17.6
million), 2019 Global Fund ($11.5 million), and Dover X ($10.0
million).
Distributions in the HVPE portfolio were driven by a mix of
HarbourVest funds across all strategies, with the largest total
amount in the period ($9.7 million) received from Fund IX Venture,
a US-focused venture fund-of-funds currently approaching its mature
phase, which distributed proceeds received from multiple underlying
partnerships. The 2013 Direct Fund, a global direct co-investment
fund in its growth phase, followed with distributions totalling
$7.7 million, which included proceeds received from the 2019 sale
of UK-based telecom tower operator Eaton Towers.
PORTFOLIO COMPANIES
During the period, the ten largest individual company
realisations by HVPE's share of proceeds generated total
distributions of $39.2 million. Of these ten companies, four were
in HVPE's top 50 portfolio companies at 31 January 2020. Further
details are provided on these four below (ordered by size of
distribution). The top ten distributions by value are listed on
page 24.
-- HVPE received $6.0 million from the partial sale of
publicly-traded shares of TeamViewer over the period. TeamViewer, a
software solutions provider listed on the Frankfurt Stock Exchange,
was HVPE's ninth largest company at 31 January 2020.
-- HVPE's share of proceeds from the investment held in Knowlton
Development Corporation ("KDC"), a leading contract manufacturer of
health and personal care products, was $4.3 million. KDC was HVPE's
12th largest company at 31 January 2020.
-- HVPE received $3.6 million from the investment held in Lytx,
a provider of video safety telematics software for vehicles. Lytx
was HVPE's 11th largest company at 31 January 2020.
-- HVPE's share of proceeds from the sale of human resources
software solutions provider Saba Software to Cornerstone OnDemand,
was $3.5 million. Saba Software was HVPE's 49th largest company at
31 January 2020.
During the six months ended 31 July 2020, there were 119
liquidity events, down from 178 for the six months to 31 July 2019.
This represents a decline of 33% compared to the same period last
year. The lower volume of exit activity for the first half of 2020
resulted from the disruption and associated uncertainty caused by
COVID-19, leading many General Partners ("GPs") to suspend or delay
exit processes. Approximately 73% (87) of the liquidity events in
HVPE's portfolio were trade sales or sponsor-to-sponsor
transactions, with the remaining 27% (32) being IPOs. Notable IPOs
during the period included Zoom Information (business database
provider), GoHealth (technology-based health insurance services),
and Revolution Medicines (clinical-stage oncology).
Of HVPE's total 119 liquidity events, 81, or 68%, related to
venture-backed companies. This figure is representative of wider
market trends as there were a considerable number of
venture-related exits in the first half of the year, with the
technology and healthcare sectors dominating this activity.
COMPANY ACTIVITY
New Fund Commitments
In the six months ended 31 July 2020, HVPE made total
commitments of $87.8 million across two HarbourVest funds (six
months to 31 July 2019: $315.0 million). This took total unfunded
commitments to $1.7 billion at 31 July 2020.
Of the total capital committed, the largest commitment ($50.0
million) was made to Dover X, a global secondary fund. This brings
the total amount committed by HVPE to this fund to $150.0 million.
The remaining amount was a commitment of $37.8 million to a
secondary transaction within Secondary Overflow IV as mentioned on
page 4 of this report. The deal is structured such that HVPE has
made a gross commitment of $37.8 million but expects only half of
this amount ($18.9 million) to be called over time.
These commitments are in line with the Company's Strategic Asset
Allocation ("SAA") targets and reflect the Investment Manager's and
Board's current perspective on the most appropriate portfolio
composition required to optimise long-term NAV growth for
shareholders.
The comparatively low level of commitments made during the first
half of the year was a result of a decision by the Board and the
Investment Manager to place HVPE's commitment plan in respect of
new HarbourVest funds temporarily on hold, in order for the
Investment Manager to review the Company's portfolio construction
priorities during this uncertain period. A further assessment has
since been made, and new fund commitments have restarted as
reported under Recent Events on page 8. In the meantime,
HarbourVest funds from the existing Investment Pipeline have
continued to call capital for new investments, enabling the Company
to take advantage of attractive opportunities.
MARKET ENVIRONMENT: six months to 30 june 2020(1)
Private equity fundraising remained robust in the US and Europe
during the first half of 2020, totalling $101.6 billion (H1 2019:
$102.8 billion) and EUR19.6 billion (H1 2019: EUR12.0 billion),
respectively, across a total of 139 funds (H1 2019: 76 funds). The
comparably high figures this year were driven by established GPs
with long-standing LP relationships, which had started their
fundraising processes earlier in the year.
By contrast, investment activity slowed down significantly
across all regions with deal activity totalling $326.7 billion in
the US (H1 2019: $404.7 billion) and EUR46.3 billion in Europe (H1
2019: EUR73.7 billion) - decreases of 19% and 37%, respectively.
The sharp decline in capital deployed was driven by a multitude of
COVID-19-related factors as GPs temporarily paused or terminated
transactions, with attention re-focused on existing portfolio
companies. Unprecedented policy action from central banks and
governments has led to a partial recovery in recent months.
However, the "second wave" of COVID-19-induced lockdowns could
potentially dampen the prospect of an imminent return to normal
levels of investment activity. In the interim, bolt-on investment
strategies and distressed opportunities may be attractive
propositions for GPs, along with fast-growing sectors such as cloud
computing, ecommerce, cybersecurity, cashless payments, and
collaboration software.
Exit value and volume in the private equity asset class were
materially lower across all regions during the first half of the
year. Public market volatility and economic uncertainty resulted in
significant markdowns for some portfolio company valuations at the
end of Q1. This may explain the considerable reduction in appetite
for exits in April and May, indicating that GPs generally preferred
to extend holding periods rather than liquidate assets at
potentially discounted prices. Estimated exits in the US totalled
$138.4 billion and 392 in number, representing declines of 37% and
36% in value and volume, respectively, compared to H1 2019 totals.
Asia Pacific and Europe were also subdued, with the latter
recording a total EUR97.0 billion of exits, which puts it on pace
for its lowest annual total in six years. Nevertheless, over the
summer of 2020 we saw exit activity in all regions begin to rebound
following the recovery in public markets in Q2, although
considerable uncertainty remains.
1 Source - Pitchbook database.
Recent Events
New Commitments
In October and November 2020, HVPE agreed to participate in
three potential transactions as a result of the Company's existing
commitments to HarbourVest funds. The combined commitment in
principle is up to $34.3 million, however, these deals are subject
to completion, and could also be scaled-back. It is anticipated
that these transactions will close on or before 31 December 2020.
Further information will be provided in the estimated monthly NAVs
as and when the transactions complete.
HVPE Published Estimated NAV at 31 October 2020
HVPE publishes its estimated NAV on a monthly basis. These
reports are available on the Company's website, generally within 20
calendar days of the month end.
On 20 November, HVPE published an estimated NAV per share at 31
October 2020 of $28.60 (GBP22.09), an increase of $0.42 from the
final 31 July 2020 NAV (US GAAP) figure of $28.18. This latest NAV
per share is based on a valuation breakdown of: 13% as at 31
October (representing the public companies in the portfolio); 3%
actual 30 September 2020; and 84% actual 30 June 2020. Consistent
with previous estimated NAV reports, valuations are also adjusted
for foreign exchange movements, cash flows, and any known material
events to 31 October 2020.
The Investment Pipeline of unfunded commitments decreased from
$1,681.7 million at 31 July 2020 to $1,613.8 million at 31 October
2020, based on capital funded and taking foreign exchange movements
into account.
At the end of October HVPE's borrowing was $120.0 million.
HVPE's look-through exposure to borrowing at the HarbourVest fund
level had increased by $28.8 million to $385.8 million. The latest
balance sheet ratios can be found in the factsheet on the HVPE
website (www.hvpe.com).
Portfolio Risk Assessment Update
In April 2020, the Investment Manager embarked on a bottom-up
assessment of the likely impact of COVID-19 on HVPE's portfolio.
The results of this exercise, as reported in the Company's 2020
Annual Report and Accounts on page 11, indicated that the majority
of HVPE's assessed portfolio by value had been deemed likely to
experience only a limited or moderate impact, with a relatively
small proportion expected to be materially impacted.
By October 2020, the Investment Manager had completed a further
second-round portfolio risk assessment. While broadly similar in
methodology to the first, this most recent analysis focused on the
larger positions within the portfolio. This assessment resulted in
approximately 78% of HVPE's portfolio by value being reviewed. To
provide a like-for-like comparison, the equivalent April results
for the same October sample set have been updated and included
below - noting they will differ from the figures published on 24
June 2020.
As of October, 83% of the assessed portfolio was classified as
expected to experience limited or moderate impact while only 6% was
identified as high risk at that point in time as shown in the chart
below. This compares to 81% and 9%, respectively, showing an
improvement over the six months.
Risk Level Description
---------- ----------------------------------------
Company currently experiencing material
High disruption from COVID-19
---------- ----------------------------------------
Company likely to experience significant
Heightened disruption from COVID-19
---------- ----------------------------------------
Company expected to experience some
disruption, primarily due to general
Moderate demand slowdown
---------- ----------------------------------------
Company likely to be only moderately
impacted, or may even see benefit
Limited in the current environment
---------- ----------------------------------------
Principal Risks and Uncertainties
RISK FACTORS AND INTERNAL CONTROLS
The Board is responsible for the Company's risk management and
internal control systems and actively monitors the risks faced by
the Company, taking steps to mitigate and minimise these where
possible.
RISK APPETITE
The Board's investment risk appetite is consistent with an
over-commitment policy (as explained on page 50 of the 2020 Annual
Report and Accounts) that allows balanced, regular investment
through economic and investment cycles whilst ensuring that the
Company has access to sufficient funding for any potential negative
cash flow situations, including under an extreme downside scenario.
At the same time, the funding available to the Company by way of
cash balances and lending facilities is managed to ensure that its
cost, by way of interest, facility fees or cash drag, is
reasonable. When considering other risks, the Board's risk appetite
is effectively governed by a cost benefit analysis when assessing
mitigation measures.
PRINCIPAL RISKS
As recommended by the Audit and Risk Committee, the Directors
have adopted a risk management framework to govern how the Board
identifies existing and emerging risks, determines risk appetite,
identifies mitigation and controls, assesses, monitors and measures
risk, and reports on risks. The Board reviews risks at least twice
a year and receives deep-dive reports on specific risks as
recommended by the Audit and Risk Committee. At the start of the
period under review, the Board had identified 12 main risks which
have a higher probability and a significant potential impact on
performance, strategy, reputation, or operations (Category A
risks). Of these, the five risks identified below were considered
the principal risks faced by the Company where the combination of
probability and impact was assessed as being most significant. The
Board also considered that there were 20 existing or emerging risks
(Category B risks), which are monitored on a watch list.
As the COVID-19 pandemic took hold, the Board and the Audit and
Risk Committee considered the impact that the situation would have
on the Company's business and its service providers. As a result,
the Board has elevated risks relating to the Company's loan
facility, Key Persons and Valuation from Category B to Category A,
and downgraded risks relating to Fund Expenses and MiFID II from
Category A to Category B. Due to the material impact that the
pandemic has had and will have on society and the economy, and in
turn, the Company, the principal risks below are considered through
the lens of COVID-19. The Directors, as stated in the "Statement of
Directors' Responsibilities in Respect of the Semi-Annual Report
and Accounts" on page 35, believe to the best of their knowledge
risks set out below also meet the Disclosure Guidance and
Transparency Rules ("DTR") requirements.
Risk Description Mitigation with current COVID-19
comment
-------------------------------------- -------------------------------------- --------------------------------------
Balance Sheet Risks The Company's balance sheet strategy The Company has a credit facility of
and its policy for the utilisation of size and tenor that is sufficient for
leverage are described modelled downside
on page 27 of the Company's 2020 scenarios. The Board has put a
Annual Report. The Company continues monitoring programme in place,
to maintain an over-commitment determined with reference to
strategy and may draw on its credit portfolio models, in order to mitigate
facility to bridge periods of negative against the requirement to sell assets
cash flow when at a discount
capital calls on investments are during periods of NAV decline. The
greater than distributions. The level monitoring programme also considers
of potential borrowing the level of debt at
available under the credit facility the HarbourVest fund level which is
could be negatively affected by factored into the credit facility
declining NAVs. In a period loan-to-value ratio
of declining NAVs, reduced covenants. Both the Board and the
realisations, and rapid substantial Investment Manager will continue to
cash calls, the Company's net monitor these metrics
leverage ratio could increase beyond actively as the COVID-19 pandemic
an appropriate level, resulting in a progresses and will take appropriate
need to sell assets. action as required,
A reduction in the availability or such as pausing further commitments,
utilisation of bridging debt at the to attempt to mitigate these risks.
HarbourVest fund-level, Please also see the
or accelerated repayment thereof, Going Concern and Viability Statement
could result in an increase in capital in the Company's 2020 Annual Report
calls to a level and Accounts for
in excess of modelled scenarios. information on scenarios that are
considered by the Board on an ongoing
basis. See also page
34 of this report for the updated
statement regarding Going Concern.
-------------------------------------- -------------------------------------- --------------------------------------
Popularity of Listed Private Equity Investor sentiment may change towards Following the onset of the COVID-19
Sector the Listed Private Equity sector, pandemic, there were significant falls
resulting in a further in public markets
widening of the Company's share price but these have, on the whole, been
discount relative to NAV per share. reversed. As a consequence, and in
common with the majority
of its peers, HVPE's discount to NAV
initially widened. This was partly due
to negative sentiment
regarding equities in general but also
because the exact level and timing of
the impact that
COVID-19 would have on either the
global economy as a whole or private
companies in particular
was not yet known. Subsequently, as
public markets have partially
recovered, the discounts
relating to listed private equity
companies have started to narrow.
-------------------------------------- -------------------------------------- --------------------------------------
Public Market Risks The Company makes venture capital and Normally the Company's exposure to
buyout investments in companies where individual public markets is partially
operating performance mitigated by the
is affected by the broader economic geographical diversification of the
environment within the countries in portfolio. While COVID-19 is having an
which those companies impact on the global
carry out business. While these economy, the severity appears to vary
companies are generally privately by geography and industry sector.
owned, their valuations HVPE's diversified
are, in most cases, influenced by portfolio has helped to mitigate the
public market comparables. In effect on the Company's NAV per share.
addition, approximately 10% In previous downturns private market
of the Company's portfolio is made up valuations have not been impacted as
of publicly traded securities whose much as public markets
values increase and there has been a dampened effect
or decrease in response to market on volatility.
movements. When global public markets Public markets have returned to
decline or the economic pre-COVID-19 levels but more
situation deteriorates, the Company's uncertainty lies ahead as many
NAV is usually negatively affected. countries now face a second wave of
the pandemic.
-------------------------------------- -------------------------------------- --------------------------------------
Performance of HarbourVest Partners The Company is dependent on its As at the date of this report,
Investment Manager and HarbourVest's HarbourVest is continuing to operate
investment professionals. flexible working arrangements
With the exception of eight with the majority of staff working
co-investments, all of the Company's from home. HarbourVest is confident
assets, save for cash balances that its business continuity
and short-term liquid investments, are processes are robust and that they can
invested in HarbourVest funds. continue to provide services to the
Additionally, HarbourVest employees Company to the
play key roles in the operation and usual high standard.
control of the Company. The Board is satisfied that
The incapacity, departure, or contingency arrangements regarding the
reassignment of some or all of key team at HarbourVest
HarbourVest's professionals could responsible for HVPE are sufficient.
prevent the Company from achieving its
investment objectives.
-------------------------------------- -------------------------------------- --------------------------------------
Trading Liquidity and Price Public market movements over the Since the Company's shares trade on
period under review have increased the Main Market of the London Stock
volatility in HVPE's share Exchange, this provides
price, and it is currently trading at increased liquidity and accessibility
a price which represents a discount to to a wider variety range of potential
its NAV. Any shareholders.
ongoing discount to NAV that is In addition, the Board continues to
materially different to the Company's monitor the discount to NAV and will
peer group has the potential consider appropriate
to damage the Company's reputation and solutions to address any ongoing or
to cause shareholder dissatisfaction. substantial discount to NAV. The Board
During periods of short-term market has overseen the
stress, supply and demand for shares allocation of additional investor
can be impacted. relations resource in recent years and
If demand decreases or supply the Company has attracted
increases disproportionately, the new shareholders.
bid/offer spread could widen, The HVPE Board through the activities
resulting in less attractive pricing of the Investment Manager, HarbourVest
for investors seeking to buy or sell Partners, seeks
shares in the short to drive improved liquidity over the
term. medium to long term by promoting the
The five largest shareholders Company's shares
represent approximately 46% of the to a broad range of prospective
Company's shares in issue. investors. This has continued
This may contribute to a lack of throughout the COVID-19 pandemic.
liquidity and widening discount. Also,
in the event that
a substantial shareholder chooses to
exit the share register, this may have
an effect on the
Company's share price and consequently
the discount to NAV.
-------------------------------------- -------------------------------------- --------------------------------------
Directors' Report
Semi-Annual Report and Unaudited Condensed Interim Consolidated
Financial Statements
A description of the important events that have occurred during
the six months ended 31 July 2020 and their impact on the
performance of the Company are given in the Semi-Annual Report and
Unaudited Condensed Interim Consolidated Financial Statements (the
"Interim Financial Statements") - together the "Semi-Annual Report
and Accounts"; specifically the Chair's Statement and the
Investment Manager's Report, alongside the Interim Financial
Statements, and are incorporated here by reference.
The principal risks and uncertainties facing the Company and how
the Company seeks to mitigate them can be found on pages 20 to
21.
There were no material related party transactions which took
place in the first six months of the financial year, other than
those disclosed in Note 9 to the Interim Financial Statements.
There have been no changes to the related party transactions
described in the 2020 Annual Report and Accounts that could have a
material effect on the financial position or performance of the
Company in the first six months of the current financial year.
This Semi-Annual Report and Accounts has been reviewed by the
Company's auditor in accordance with guidance contained in
International Standard on Review Engagements 2410 (UK and Ireland)
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board ("ISRE 2410").
INTRODUCTION TO THE Going Concern
Since the inception of HVPE, the Directors have relied upon
model scenarios to manage the Company's liquidity requirements and
balance sheet risk more generally. This modelling, typically
updated annually in November, also allows the Directors to evaluate
whether the Company is a Going Concern. While the modelling process
has been refined over the years, it has provided a consistent
approach through which the Directors have been able to provide a
positive Going Concern assessment, as demonstrated through the GFC.
Historically the models have assessed four scenarios: Optimistic,
Base, Pessimistic and Extreme Downside presented by the Investment
Manager. The onset of COVID-19 and the subsequent portfolio
assessment undertaken by HarbourVest led the Company to update its
models mid-year as described on page 28 of HVPE's 2020 Annual
Report and Accounts. Given the uncertainty at that point in the
pandemic the Base and Pessimistic scenarios were described as High
Base and Low Base cases. For the purpose of assessing the Going
Concern and the Viability Statement over one year and five years,
respectively, for the 2020 Annual Report and Accounts, the
Directors primarily focused on two scenarios: the Low Base and the
Extreme Downside. The Low Base was effectively similar to previous
Pessimistic scenarios; however, the name was updated to reflect the
higher degree of focus on the Low Base for planning purposes.
Following a more optimistic tracking of the scenarios than
anticipated over the six months to 31 July 2020, the Investment
Manager has completed the annual model scenario update and reverted
to its pre-COVID model scenarios (Optimistic, Base, Pessimistic and
Extreme Downside). These have been used to form the basis of the
Going Concern as provided below; they are updated to reflect recent
performance and are therefore not directly comparable with the
scenarios presented in the 2020 Annual Report and Accounts.
Going Concern
The performance of the investments held by the Company over the
reporting period are described in Note 4 to the Interim Financial
Statements and the outlook for the future is described in the
Chair's Statement. The Company's financial position, its cash
flows, and liquidity position are set out within the Semi-Annual
Report and Accounts. Details of its financial instruments, and its
exposures to market risk, liquidity risk, and cash flow risk, are
set out in the Governance Report on pages 60 and 61 in the
Company's 2020 Annual Report and Accounts, and are unchanged.
In addition, the Board has performed a robust assessment of the
principal risks facing HVPE, along with the assessment of the Going
Concern of the Company for the period to 31 December 2021, and
believes that there will be no material change in the principal
risks of the Company for the next six months. The latest Principal
Risks and Uncertainties can be found on pages 20 to 21.
As part of this exercise the Board considered the Optimistic,
Base, Pessimistic and Extreme Downside model scenarios assuming
varying degrees of COVID-19-related portfolio impact over the
period ending 31 December 2021. The assessment primarily focused on
the Base and Extreme Downside cases. The Base case was considered a
reasonable scenario given the current economic environment and
possible ongoing impact related to COVID-19. While this case was
the primary focus of the Board in assessing the Going Concern of
the Company, the Extreme Downside case was also considered and was
designed to specifically stress the balance sheet with multiple
worst case scenarios all playing out over the period to 31 December
2021. The Board does not believe the Extreme Downside case is a
likely scenario but factors this into the Going Concern assessment.
The results of these model scenarios showed that the Company would
be able to withstand the impact of such circumstances should they
play out during that period.
In the assessment of the Going Concern status of the Company the
Board also considered portfolio activity through to 26 November
2020, more specifically to validate the assumptions used. The Board
compared the projections for the period from 1 February 2020 to 31
October 2020 under the Base case to the actual out-turn during that
period, and for reference, to the equivalent period in 2019. Based
on the review of actual activity compared to model projections
through to 26 November 2020, the Board has a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over the period ending 31 December
2021. Accordingly, it continues to adopt the Going Concern basis in
the preparation of this Semi-Annual Report and Accounts.
Statement of Directors' Responsibilities in Respect of the
Semi-Annual Report and Accounts
The Directors are responsible for preparing the Semi-Annual
Report and Accounts in accordance with applicable law and
regulations.
The Directors confirm that to the best of their knowledge:
-- the Semi-Annual Report and Accounts have been prepared in
accordance with US GAAP and give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company; and
-- the Chair's Statement, Investment Manager's Report, and
Principal Risks and Uncertainties section include a fair review of
the information required by:
(i) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the Interim Financial Statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(ii) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the financial year and that have materially
affected the financial position or the performance of the entity
during that period; and any changes in the related party
transactions described in the 2020 Annual Report that could do
so.
By order of the Board
26 November 2020
Unaudited Condensed Interim Consolidated Statements of Assets
and Liabilities
At 31 July and 31 January 2020
In US Dollars 31 July 2020 (Unaudited) 31 January 2020 (Audited)
----------------------------------------------------------------- ------------------------ -------------------------
ASSETS
Investments (Note 4) 2,255,615,347 2,065,519,797
Cash and equivalents 109,768,526 130,616,160
Other assets 7,778,338 8,445,852
----------------------------------------------------------------- ------------------------ -------------------------
Total assets 2,373,162,211 2,204,581,809
LIABILITIES
Amounts due under the credit facility 120,000,000 -
Accounts payable and accrued expenses 2,319,783 1,802,505
Accounts payable to HarbourVest Advisers L.P. (Note 9) 83,971 92,281
----------------------------------------------------------------- ------------------------ -------------------------
Total liabilities 122,403,754 1,894,786
Commitments (Note 5)
NET ASSETS $2,250,758,457 $2,202,687,023
NET ASSETS CONSIST OF
Shares, unlimited shares authorised, 79,862,486 shares issued and
outstanding at 31 July and
31 January 2020, no par value 2,250,758,457 2,202,687,023
----------------------------------------------------------------- ------------------------ -------------------------
NET ASSETS $2,250,758,457 $2,202,687,023
Net Asset Value per share $28.18 $27.58
----------------------------------------------------------------- ------------------------ -------------------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
The Unaudited Condensed Interim Consolidated Financial
Statements on pages 37 to 49 were approved by the Board on 26
November 2020 and were signed on its behalf by:
Ed Warner Steven Wilderspin
Chair Chair of the Audit and Risk Committee
Unaudited Condensed Interim Consolidated Statements of
Operations
For the Six-month Periods Ended 31 July 2020 and 2019
In US Dollars 31 July 2020 31 July 2019
------------------------------------------------------ ------------ ------------
REALISED AND UNREALISED GAINS (LOSSES) ON INVESTMENTS
Net realised gain on investments 14,442,795 68,272,120
Net change in unrealised appreciation on investments 40,196,279 73,453,115
------------------------------------------------------ ------------ ------------
NET GAIN ON INVESTMENTS 54,639,074 141,725,235
INVESTMENT INCOME
Interest and dividends from cash and equivalents 339,085 986,969
EXPENSES
Non-utilisation fees (Note 6) 2,522,601 2,935,360
Interest expense (Note 6) 1,356,931 16,973
Investment services (Note 3) 1,013,431 956,184
Financing expenses 733,224 769,866
Professional fees 393,794 504,443
Management fees (Note 3) 378,524 378,164
Directors' fees and expenses (Note 9) 261,450 278,582
Marketing expenses 150,818 155,370
Other expenses 95,952 460,669
------------------------------------------------------ ------------ ------------
Total expenses 6,906,725 6,455,611
------------------------------------------------------ ------------ ------------
NET INVESTMENT LOSS (6,567,640) (5,468,642)
------------------------------------------------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $48,071,434 $136,256,593
------------------------------------------------------ ------------ ------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of
Changes
in Net Assets
For the Six-month Periods Ended 31 July 2020 and 2019
In US Dollars 31 July 2020 31 July 2019
----------------------------------------------------- -------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net realised gain on investments 14,442,795 68,272,120
Net change in unrealised appreciation 40,196,279 73,453,115
Net investment loss (6,567,640) (5,468,642)
----------------------------------------------------- -------------- --------------
Net increase in net assets resulting from operations 48,071,434 136,256,593
NET ASSETS AT BEGINNING OF PERIOD 2,202,687,023 1,923,955,651
----------------------------------------------------- -------------- --------------
NET ASSETS AT OF PERIOD $2,250,758,457 $2,060,212,244
----------------------------------------------------- -------------- --------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Statements of Cash
Flows
For the Six-month Periods Ended 31 July 2020 and 2019
In US Dollars 31 July 2020 31 July 2019
------------------------------------------------------------------------------ ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations 48,071,434 136,256,593
Adjustments to reconcile net increase in net assets resulting from operations
to net cash used in operating activities:
Net realised gain on investments (14,442,795) (68,272,120)
Net change in unrealised depreciation (40,196,279) (73,453,115)
Contributions to private equity investments (214,156,887) (202,413,602)
Distributions from private equity investments 78,700,411 138,913,095
Other 1,176,482 (355,329)
------------------------------------------------------------------------------ ------------- -------------
Net cash used in operating activities (140,847,634) (69,324,478)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing on the credit facility 200,000,000 30,000,000
Repayments in respect of the credit facility (80,000,000) (30,000,000)
------------------------------------------------------------------------------ ------------- -------------
Net change in financing activities 120,000,000 -
------------------------------------------------------------------------------ ------------- -------------
NET DECREASE IN CASH AND EQUIVALENTS (20,847,634) (69,324,478)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 130,616,160 156,570,557
------------------------------------------------------------------------------ ------------- -------------
CASH AND EQUIVALENTS AT OF PERIOD $109,768,526 $87,246,079
------------------------------------------------------------------------------ ------------- -------------
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Unaudited Condensed Interim Consolidated Schedule of
Investments
At 31 July 2020
In US Dollars
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Distributions Fair Value as a % of
US Funds Unfunded Commitment Amount Invested(*) Received Fair Value Net Assets
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
V-Partnership Fund
L.P. 2,220,000 46,709,079 45,924,243 942,013 0.0
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VI-Direct Fund L.P. 1,312,500 46,722,408 38,404,878 3,218,303 0.1
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VI-Partnership Fund
L.P. 5,175,000 204,623,049 237,137,870 1,303,633 0.1
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VII-Venture
Partnership Fund
L.P. 2,318,750 135,290,448 189,040,169 21,017,201 0.9
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VII-Buyout
Partnership Fund
L.P. 3,850,000 74,417,291 101,949,548 1,929,319 0.1
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman
Mezzanine and
Distressed Debt
Fund L.P. 2,000,000 48,201,553 59,331,422 4,891,747 0.2
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman Buyout
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 7,500,000 245,258,801 347,911,571 59,933,411 2.7
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman Venture
Fund L.P. 1,000,000 49,191,736 71,260,151 24,061,532 1.1
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
2007 Cayman Direct
Fund L.P. 2,250,000 97,876,849 160,808,238 4,760,268 0.2
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Buyout
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 10,472,500 60,808,226 50,802,949 54,937,380 2.4
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Credit
Opportunities Fund
L.P. 2,500,000 10,048,693 6,286,491 8,395,083 0.4
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Venture
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 3,500,000 66,825,714 57,743,026 85,314,245 3.8
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
2013 Cayman Direct
Fund L.P. 3,228,996 97,131,486 119,712,019 61,729,368 2.7
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
Cayman Cleantech
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund II L.P. 4,050,000 16,005,952 3,795,869 16,101,510 0.7
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
X Buyout Feeder
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 120,960,000 131,067,552 36,413,397 145,031,878 6.4
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
X Venture Feeder
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 48,470,000 99,583,838 13,076,652 154,132,074 6.9
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
Mezzanine Income
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 8,155,000 42,066,579 20,666,703 38,318,329 1.7
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
XI Buyout Feeder
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 287,000,000 63,000,000 1,232,227 66,560,973 3.0
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
XI Micro Buyout
Feeder Fund L.P. 55,250,000 9,750,274 183,942 9,518,834 0.4
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Partners
XI Venture Feeder
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Fund L.P. 145,350,000 44,686,139 660,366 48,253,303 2.2
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
HarbourVest Adelaide
Feeder L.P. 76,125,000 73,875,000 - 85,309,304 3.8
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
Total US Funds 792,687,746 1,663,140,667 1,562,341,731 895,659,708 39.8
-------------------- ------------------- ------------------ -------------------- ----------- --------------------
International/Global Distributions Fair Value as a %
Funds Unfunded Commitment Amount Invested(*) Received Fair Value of Net Assets
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest
International
Private Equity
Partners
III-Partnership Fund
L.P. 3,450,000 147,728,557 148,439,622 432,328 0.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest
International
Private Equity
Partners IV-Direct
Fund L.P. - 61,452,400 53,436,349 1,627,517 0.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP V-2007 Cayman
European Buyout
Companion Fund
L.P.(--) 1,676,597 63,880,350 81,916,877 3,705,507 0.2
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street VII
Cayman L.P.(++) 4,413,862 95,586,138 127,833,710 7,247,402 0.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman
Partnership Fund
L.P.(**) 5,889,000 117,844,925 93,878,622 110,865,025 4.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman Asia
Pacific Fund L.P. 2,500,000 47,687,431 36,427,752 40,742,569 1.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman
Emerging Markets
Fund L.P. - 30,059,489 7,837,605 24,949,309 1.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HVPE Avalon
Co-Investment L.P. 1,643,962 85,135,136 124,138,700 466,198 0.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street VIII
Cayman L.P. 16,200,000 163,924,389 192,957,156 66,699,748 3.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HVPE Charlotte
Co-Investment L.P. - 93,894,011 142,799,867 17,356,636 0.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Global
Annual Private
Equity Fund L.P. 16,800,000 83,201,202 50,397,305 100,423,030 4.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Partnership
Feeder Fund L.P. 27,187,500 97,812,500 19,779,736 123,608,484 5.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Asia
Pacific Feeder Fund
L.P. 3,450,000 26,550,000 4,841,810 34,193,276 1.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Emerging
Markets Feeder Fund
L.P. 5,200,000 14,800,000 2,668,611 15,940,506 0.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Europe
Feeder Fund L.P. 18,179,344 54,112,474 14,359,232 64,169,813 2.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Canada
Parallel Growth
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Fund L.P.(++++) 9,378,937 14,704,891 3,168,802 21,085,217 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2015
Global Fund L.P. 20,000,000 80,017,309 32,968,961 89,482,293 4.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2016
Global AIF L.P. 34,000,000 66,026,107 30,189,901 66,368,527 2.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Partners
Co-Investment IV
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
AIF L.P. 7,000,006 92,999,994 14,371,425 109,200,859 4.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street IX
Cayman L.P. 23,000,000 77,000,000 30,836,984 77,720,256 3.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Real
Assets III Feeder
L.P. 11,000,000 39,000,000 5,917,231 31,276,360 1.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2017
Global AIF L.P. 42,500,000 57,520,959 9,704,384 61,538,663 2.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VIII
Partnership AIF L.P. 129,200,000 40,800,000 4,900,813 45,045,178 2.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche B 489,717 9,668,120 1,935,926 19,590,599 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Asia
Pacific VIII AIF
Fund L.P. 29,750,000 20,255,566 993,725 21,237,461 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche C 1,335,088 8,267,887 6,016,969 6,129,562 0.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche F 12,388,541 17,611,459 3,702,345 17,685,772 0.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche G 1,956,097 13,043,903 5,208,838 11,930,444 0.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche H 11,572,647 18,427,353 2,333,500 21,815,319 1.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2018
Global Feeder Fund
L.P. 41,650,000 28,350,000 263,321 32,590,181 1.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Partners
Co-Investment V
Feeder Fund L.P. 55,000,000 45,048,219 - 53,019,421 2.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Real
Assets IV Feeder
L.P. 50,000,000 - - 2,276,224 0.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2019
Global Feeder Fund
L.P. 83,500,000 16,506,832 - 20,298,724 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Credit
Opportunities Fund
II L.P. 50,000,000 - - (74,554) 0.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street X Feeder
Fund L.P. 135,000,000 15,018,169 - 22,428,224 1.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
Fund IV L.P.
(Tranche E) 33,745,328 4,032,262 - 16,883,561 0.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Total
International/Global
Funds 889,056,626 1,847,968,032 1,254,226,079 1,359,955,639 60.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
TOTAL INVESTMENTS $1,681,744,372 $3,511,108,699 $2,816,567,810 $2,255,615,347 100.2
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
* Includes purchase of limited partner interests for shares and cash at the time of HVPE's IPO.
Includes ownership interests in HarbourVest Partners VII-Cayman
Partnership entities.
++ Includes ownership interest in Dover Street VII (AIV 1) Cayman L.P.
-- Fund denominated in euros. Commitment amount is EUR47,450,000.
** Fund denominated in euros. Commitment amount is
EUR100,000,000.
Fund denominated in euros. Commitment amount is
EUR63,000,000.
++++ Fund denominated in Canadian dollars. Commitment amount is
C$32,000,000.
As of 31 July 2020, the cost basis of partnership investments is
$1,791,466,864.
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
At 31 January 2020 (Audited)
In US Dollars
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Distributions Fair Value as a % of
US Funds Unfunded Commitment Amount Invested* Received Fair Value Net Assets
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
V-Partnership Fund
L.P. 2,220,000 46,709,079 45,924,243 1,115,289 0.0
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VI-Direct Fund L.P. 1,312,500 46,722,408 38,404,878 3,611,410 0.2
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VI-Partnership Fund
L.P. 5,175,000 204,623,049 237,137,870 1,430,428 0.1
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VII-Venture
Partnership Fund
L.P. 2,318,750 135,290,448 185,923,470 23,788,214 1.1
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VII-Buyout
Partnership Fund
L.P. 3,850,000 74,417,291 101,688,184 2,221,758 0.1
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman
Mezzanine and
Distressed Debt Fund
L.P. 2,000,000 48,201,553 59,331,422 5,634,823 0.2
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman Buyout
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 11,250,000 241,508,801 343,051,209 61,525,909 2.8
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
VIII-Cayman Venture
Fund L.P. 1,000,000 49,191,736 68,026,931 25,647,479 1.2
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
2007 Cayman Direct
Fund L.P. 2,250,000 97,876,849 160,808,238 4,423,302 0.2
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Buyout
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 12,247,500 59,033,226 45,422,100 57,619,201 2.6
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Credit
Opportunities Fund
L.P. 3,125,000 9,423,693 6,135,379 8,218,265 0.4
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
IX-Cayman Venture
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 3,500,000 66,825,714 48,003,773 86,896,032 3.9
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
2013 Cayman Direct
Fund L.P. 3,228,996 97,131,486 111,969,614 76,990,456 3.5
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
Cayman Cleantech
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund II L.P. 4,300,000 15,755,952 3,545,869 15,844,249 0.7
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
X Buyout Feeder
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 138,600,000 113,427,552 36,413,397 125,158,592 5.7
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
X Venture Feeder
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 52,910,000 95,143,838 11,816,651 141,682,599 6.4
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
Mezzanine Income
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 8,155,000 42,066,579 19,963,861 39,670,509 1.8
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
XI Buyout Feeder
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 318,500,000 31,500,000 - 36,490,456 1.7
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
XI Micro Buyout
Feeder Fund L.P. 63,050,000 1,950,274 - 2,332,052 0.1
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Partners
XI Venture Feeder
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Fund L.P. 171,000,000 19,036,139 - 21,829,412 1.0
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
HarbourVest Adelaide
Feeder L.P. 76,125,000 73,875,000 - 88,168,052 4.0
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
Total US Funds 886,117,746 1,569,710,667 1,523,567,089 830,298,487 37.7
--------------------- ------------------- ---------------- --------------------- ----------- --------------------
International/Global Distributions Fair Value as a %
Funds Unfunded Commitment Amount Invested(*) Received Fair Value of Net Assets
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest
International
Private Equity
Partners
III-Partnership Fund
L.P. 3,450,000 147,728,557 148,439,622 459,648 0.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest
International
Private Equity
Partners IV-Direct
Fund L.P. - 61,452,400 53,436,349 1,889,946 0.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP V-2007 Cayman
European Buyout
Companion Fund
L.P.(--) 1,579,087 63,880,350 81,216,511 4,205,570 0.2
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street VII
Cayman L.P.(++) 4,413,862 95,586,138 127,101,279 8,718,149 0.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman
Partnership Fund
L.P.(**) 5,546,500 117,844,925 86,215,226 114,737,162 5.2
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman Asia
Pacific Fund L.P. 3,000,000 47,187,431 34,360,314 41,735,529 1.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VI-Cayman
Emerging Markets
Fund L.P. - 30,059,489 7,122,156 30,298,326 1.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HVPE Avalon
Co-Investment L.P. 1,643,962 85,135,136 124,138,700 480,180 0.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street VIII
Cayman L.P. 16,200,000 163,924,389 190,959,375 69,693,642 3.2
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HVPE Charlotte
Co-Investment L.P. - 93,894,011 140,207,934 19,779,480 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Global
Annual Private
Equity Fund L.P. 16,800,000 83,201,202 47,245,006 97,606,581 4.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Partnership
Feeder Fund L.P. 35,312,500 89,687,500 17,955,847 112,520,808 5.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Asia
Pacific Feeder Fund
L.P. 5,625,000 24,375,000 4,389,847 30,417,420 1.4
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Emerging
Markets Feeder
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Fund L.P. 6,600,000 13,400,000 2,308,611 15,641,946 0.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VII Europe
Feeder Fund L.P. 20,266,911 51,024,594 14,359,231 58,519,964 2.6
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Canada
Parallel Growth Fund
L.P.(++++) 11,919,759 12,453,815 3,168,802 15,992,657 0.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2015
Global Fund L.P. 26,500,000 73,517,309 26,468,961 87,191,775 4.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2016
Global AIF L.P. 37,000,000 63,026,107 28,338,280 63,808,770 2.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Partners
Co-Investment IV AIF
L.P. 7,000,006 92,999,994 14,371,425 110,299,577 5.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street IX
Cayman L.P. 28,000,000 72,000,000 26,024,411 77,528,510 3.5
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Real
Assets III Feeder
L.P. 13,000,000 37,000,000 5,917,231 37,630,862 1.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2017
Global AIF L.P. 51,500,000 48,520,959 9,704,384 51,943,094 2.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HIPEP VIII
Partnership AIF L.P. 136,000,000 34,000,000 3,704,597 38,227,782 1.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche B 489,717 9,668,120 1,935,926 19,121,362 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Asia
Pacific VIII AIF
Fund L.P. 34,750,000 15,255,566 609,439 15,839,846 0.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche C 1,335,088 8,267,887 6,016,969 5,791,878 0.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche F 13,213,541 16,786,459 3,385,267 19,792,090 0.9
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche G 2,368,597 12,631,403 3,242,588 12,731,479 0.6
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Secondary Overflow
III Tranche H 11,572,647 18,427,353 1,956,022 22,215,879 1.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2018
Global Feeder Fund
L.P. 50,750,000 19,250,000 - 21,834,119 1.0
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Partners
Co-Investment V
Feeder Fund L.P. 85,000,000 15,048,219 - 15,012,230 0.7
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Real
Assets IV Feeder
L.P. 50,000,000 - - 1,556,224 0.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest 2019
Global Feeder Fund
L.P. 95,000,000 5,006,832 - 5,691,795 0.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
HarbourVest Credit
Opportunities
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Fund II L.P. 50,000,000 - - (49,383) (0.0)
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Dover Street X Feeder
Fund L.P. 95,000,000 5,000,000 - 6,356,413 0.3
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
Total
International/Global
Funds 920,837,177 1,727,241,145 1,214,300,310 1,235,221,310 56.1
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
TOTAL INVESTMENTS $1,806,954,923 $3,296,951,812 $2,737,867,399 $2,065,519,797 93.8
--------------------- ------------------- ------------------ ------------------ -------------- ------------------
* Includes purchase of limited partner interests for shares and cash at the time of HVPE's IPO.
Includes ownership interests in HarbourVest Partners VII-Cayman
Partnership entities.
++ Includes ownership interest in Dover Street VII (AIV 1) Cayman L.P.
-- Fund denominated in euros. Commitment amount is EUR47,450,000.
** Fund denominated in euros. Commitment amount is
EUR100,000,000.
Fund denominated in euros. Commitment amount is
EUR63,000,000.
++++ Fund denominated in Canadian dollars. Commitment amount is
C$32,000,000.
As of 31 January 2020, the cost basis of partnership investments
is $1,641,567,593.
The accompanying notes are an integral part of the Unaudited
Condensed Interim Consolidated Financial Statements.
Notes to the Unaudited Condensed Interim Consolidated Financial
Statements
Note 1 Company Organisation and Investment Objective
HarbourVest Global Private Equity Limited (the "Company" or
"HVPE") is a closed-ended investment company registered with the
Registrar of Companies in Guernsey under The Companies (Guernsey)
Law, 2008 (as amended). The Company's registered office is BNP
Paribas House, St Julian's Avenue, St Peter Port, Guernsey, GY1
1WA.
The Company was incorporated and registered in Guernsey on 18
October 2007. HVPE is designed to offer shareholders long-term
capital appreciation by investing in a diversified portfolio of
private equity investments.
The Company invests in private equity through private equity
funds and may make co-investments or other opportunistic
investments. The Company is managed by HarbourVest Advisers L.P.
(the "Investment Manager"), an affiliate of HarbourVest Partners,
LLC ("HarbourVest"), a private equity fund-of-funds manager. The
Company is intended to invest in and alongside existing and newly
formed HarbourVest funds. HarbourVest is a global private equity
fund-of-funds manager and typically invests capital in primary
partnerships, secondary investments, and direct investments across
vintage years, geographies, industries, and strategies.
Operations of the Company commenced on 6 December 2007,
following the initial global offering of the Class A ordinary
shares.
Share Capital
At 31 July 2020, the Company's shares were listed on the London
Stock Exchange under the symbol "HVPE". At 31 July 2020, there were
79,862,486 shares issued and outstanding. The shares are entitled
to the income and increases and decreases in the Net Asset Value
("NAV") of the Company, and to any dividends declared and paid, and
have full voting rights. Dividends may be declared by the Board of
Directors and paid from available assets subject to the Directors
being satisfied that the Company will, immediately after payment of
the dividend, satisfy the statutory solvency test prescribed by The
Companies (Guernsey) Law, 2008 (as amended).
Dividends will be paid to shareholders pro rata to their
shareholdings.
The shareholders must approve any amendment to the Memorandum
and Articles of Incorporation. The approval of 75% of the shares is
required in respect of any changes that are administrative in
nature, any material change from the investment strategy and/or
investment objective of the Company, or any change to the terms of
the investment management agreement.
There is no minimum statutory capital requirement under Guernsey
law.
Investment Manager, Company Secretary, and Administrator
The Directors have delegated certain day-to-day operations of
the Company to the Investment Manager and the Company Secretary and
Administrator, under advice to the Directors, pursuant to service
agreements with those parties, within the context of the strategy
set by the Board. The Investment Manager is responsible for, among
other things, selecting, acquiring, and disposing of the Company's
investments, carrying out financing, cash management, and risk
management activities, providing investment advisory services,
including with respect to HVPE's investment policies and
procedures, and arranging for personnel and support staff of the
Investment Manager to assist in the administrative and executive
functions of the Company.
Directors
The Directors are responsible for the determination of the
investment policy of the Company on the advice of the Investment
Manager and have overall responsibility for the Company's
activities. This includes the periodic review of the Investment
Manager's compliance with the Company's investment policies and
procedures and the approval of certain investments. A majority of
directors must be independent directors and not affiliated with
HarbourVest or any affiliate of HarbourVest.
Note 2 summary of significant accounting policies
Accounting policies have been applied consistently as presented
in the latest audited accounts.
Note 3 Material Agreements and Related Fees
Administrative Agreement
The Company has retained BNP Paribas ("BNP") as Company
Secretary and Administrator. Fees for these services are paid as
invoiced by BNP and include an administration fee of GBP50,000 per
annum, a secretarial fee of GBP60,000 per annum, compliance
services fee of GBP15,000 per annum, ad-hoc service fees, and
reimbursable expenses.
During the period ended 31 July 2020, fees of $78,780 were
incurred to BNP and are included as other expenses in the Unaudited
Condensed Interim Consolidated Statements of Operations. During the
period ended 31 July 2019, fees of $73,266 were incurred to BNP and
are included as other expenses in the Unaudited Condensed Interim
Consolidated Statements of Operations.
Registrar
The Company has retained Link Asset Services (formerly "Capita")
as share registrar. Fees for this service include a base fee of
GBP12,870, plus other miscellaneous expenses. During the periods
ended 31 July 2020 and 2019, registrar fees of $25,370 and $21,427,
respectively, were incurred and are included as other expenses in
the Unaudited Condensed Interim Consolidated Statements of
Operations.
Independent Auditor's Fees
For the periods ended 31 July 2020 and 2019, fees of $184,826
and $142,983 were accrued, respectively, and are included in
professional fees in the Unaudited Condensed Interim Consolidated
Statements of Operations. The 31 July 2020 and 2019 figures include
$103,372 and $64,443, respectively, which represents approximately
half of each period's respective annual audit fee. In addition, the
31 July 2020 and 2019 figures include fees of $81,454 and $71,738,
respectively, for audit-related services due to the Auditor, Ernst
& Young LLP, conducting a review of the Interim Financial
Statements for each period end. Other non-audit fees paid to the
Auditor by the Company were nil for the periods ended 31 July 2020
and 2019.
Investment Management Agreement
The Company has retained HarbourVest Advisers L.P. as the
Investment Manager. The Investment Manager is reimbursed for costs
and expenses incurred on behalf of the Company in connection with
the management and operation of the Company. The Investment Manager
does not directly charge HVPE management fees or performance fees
other than with respect to parallel investments. However, as an
investor in the HarbourVest funds, HVPE is charged the same
management fees and is subject to the same performance allocations
as other investors in such HarbourVest funds. During the periods
ended 31 July 2020 and 2019, reimbursements for services provided
by the Investment Manager were $1,013,431 and $956,184,
respectively.
On 30 July 2019, HVPE approved a revised Investment Management
Agreement, which has been updated for legal and regulatory changes,
and other minor amendments.
During the periods ended 31 July 2020 and 2019, HVPE had two
parallel investments: HarbourVest Acquisition S.à.r.l. (via HVPE
Avalon Co-Investment L.P.) and HarbourVest Structured Solutions II,
L.P. (via HVPE Charlotte Co-Investment L.P.). Management fees paid
for the parallel investments made by the Company were consistent
with the fees charged by the funds alongside which the parallel
investments were made during the periods ended 31 July 2020 and
2019. The HVPE Avalon Co-Investment L.P. management fee was
terminated on 30 September 2017.
Management fees included in the Unaudited Condensed Interim
Consolidated Statements of Operations are shown in the table
below:
2020 2019
----------------------------------- -------- --------
HVPE Charlotte Co--Investment L.P. $378,524 $378,164
----------------------------------- -------- --------
For the periods ended 31 July 2020 and 2019, management fees on
the HVPE Charlotte Co-Investment L.P. investment were calculated
based on a weighted average effective annual rate of 0.89% on
capital originally committed (0.87% on committed capital net of
management fee offsets) to the parallel investment.
Note 4 Investments
In accordance with the authoritative guidance on fair value
measurements and disclosures under generally accepted accounting
principles in the United States, the Company discloses the fair
value of its investments in a hierarchy that prioritises the inputs
to valuation techniques used to measure the fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in
active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to unobservable inputs (Level
3 measurements). The guidance establishes three levels of the fair
value hierarchy as follows:
Level 1 - Inputs that reflect unadjusted quoted prices in active
markets for identical assets or liabilities that the Company has
the ability to access at the measurement date.
Level 2 - Inputs other than quoted prices that are observable
for the asset or liability either directly or indirectly, including
inputs in markets that are not considered to be active.
Level 3 - Inputs that are unobservable. Generally, the majority
of the Company's investments are valued utilising unobservable
inputs, and are therefore classified within Level 3.
Level 3 investments include limited partnership interests in
HarbourVest funds which report under US generally accepted
accounting principles. Inputs used to determine fair value are
primarily based on the most recently reported NAV provided by the
underlying investment manager as a practical expedient under ASC
820. The fair value is then adjusted for known investment operating
expenses and subsequent transactions, including investments,
realisations, changes in foreign currency exchange rates, and
changes in value of private and public securities.
Income derived from investments in HarbourVest funds is recorded
using the equity pick-up method. Under the equity pick-up method of
accounting, the Company's proportionate share of the net income
(loss) and net realised gains (losses), as reported by the
HarbourVest funds, is reflected in the Unaudited Condensed Interim
Consolidated Statements of Operations as net realised gain (loss)
on investments. The Company's proportionate share of the aggregate
increase or decrease in unrealised appreciation (depreciation), as
reported by the HarbourVest funds, is reflected in the Unaudited
Condensed Interim Consolidated Statements of Operations as net
change in unrealised appreciation (depreciation) on
investments.
Because of the inherent uncertainty of these valuations, the
estimated fair value may differ significantly from the value that
would have been used had a ready market for this security existed,
and the difference could be material.
During the periods ended 31 July 2020 and 2019, the Company made
contributions of $214,156,887 and $202,413,602, respectively, to
Level 3 investments and received distributions of $78,700,411 and
$138,913,095, respectively, from Level 3 investments. As of 31 July
2020, $2,255,615,347 of the Company's investments are classified as
Level 3. As of 31 January 2020, $2,065,519,797 of the Company's
investments were classified as Level 3.
The Company recognises transfers at the current value at the
transfer date. There were no transfers during the periods ended 31
July 2020 and 2019. Investments include limited partnership
interests in private equity partnerships, all of which carry
restrictions on redemption. The investments are non-redeemable and
the Investment Manager estimates an average remaining life of 10
years with a range of 1 to 33 years remaining.
As of 31 July 2020, the Company had invested $3,703,113,852, or
68.8% of the Company's committed capital in investments and had
received $3,029,138,380 in cumulative distributions (including
dividends from the formerly held investment HarbourVest Senior
Loans Europe).
There were no investment transactions during the periods ended
31 July 2020 and 2019 in which an investment was acquired and
disposed of during the period.
Note 5 Commitments
As of 31 July 2020, the Company has unfunded investment
commitments to other limited partnerships of $1,681,744,372 which
are payable upon notice by the partnerships to which the
commitments have been made. Unfunded investment commitments of
$1,646,620,494 are denominated in US dollars, $25,744,941 are
denominated in euros, and $9,378,937 are denominated in Canadian
dollars.
As of 31 January 2020, the Company had unfunded investment
commitments to other limited partnerships of $1,806,954,923.
Unfunded investment commitments of $1,767,642,666 were denominated
in US dollars, $27,392,498 were denominated in euros, and
$11,919,759 were denominated in Canadian dollars.
Note 6 Debt Facility
As of 31 July 2020 and 2019, the Company had an agreement with
Mitsubishi UFJ Trust and Banking Corporation ("MUFG") and Credit
Suisse for the provision of a multi-currency revolving credit
facility (the "Facility") for an aggregate amount up to $600
million with a termination date no earlier than January 2026,
subject to usual covenants. The MUFG commitment was $300 million,
and the Credit Suisse commitment was $300 million.
Amounts borrowed against the Facility accrue interest at an
aggregate rate of the LIBOR/EURIBOR, a margin, and, under certain
circumstances, a mandatory minimum cost. The Facility is secured by
the private equity investments and cash and equivalents of the
Company, as defined in the agreement. Availability of funds under
the Facility and interim repayments of amounts borrowed are subject
to certain loan-to-value ratios and portfolio diversity tests
applied to the Investment Portfolio of the Company. At 31 July
2020, there was $120,000,000 debt outstanding against the Facility.
There was no debt outstanding at 31 January 2020. For the periods
ended 31 July 2020 and 2019, interest of $1,356,931 and $16,973,
respectively, was incurred. Included in other assets at 31 July
2020 and 31 January 2020 are deferred financing costs of $7,302,643
and $7,976,171, respectively, related to refinancing the Facility.
The deferred financing costs are amortised on the terms of the
Facility. The Company is required to pay a non-utilisation fee
calculated as 100 basis points per annum for the Credit Suisse
commitment and 90 basis points per annum for the MUFG commitment.
For the periods ended 31 July 2020 and 2019, $2,522,601 and
$2,935,360, respectively, in non-utilisation fees have been
incurred.
Note 7 Financial Highlights
For the Six-month Periods Ended 31 July 2020 and 2019
2020 2019
------------------------------------- --------- -------
Shares
PER SHARE OPERATING PERFORMANCE:
Net Asset Value, beginning of period $27.58 $24.09
Net realised and unrealised gains 0.68 .78
Net investment loss (0.08) (0.07)
------------------------------------- --------- -------
Total from investment operations 0.60 1.71
Net Asset Value, end of period $28.18 $25.80
Market value, end of period $19.90(*) $21.50*
Total return at Net Asset Value 2.2% 7.1%
Total return at market value (17.6%) 14.7%
------------------------------------- --------- -------
RATIOS TO AVERAGE NET ASSETS
Expenses 0.31% 0.32%
Net investment loss (0.29%) (0.27%)
------------------------------------- --------- -------
* Represents the US dollar-denominated share price.
Does not include operating expenses of underlying
investments.
Note 8 Publication and Calculation of Net Asset Value
The NAV of the Company is equal to the value of its total assets
less its total liabilities. The NAV per share is calculated by
dividing the Net Asset Value by the number of shares in issue on
that day. The Company publishes the NAV per share of the shares as
calculated, monthly in arrears, at each month end, generally within
15 days.
Note 9 Related party transactions
Other amounts payable to HarbourVest Advisers L.P. of $83,971
and $92,281 represent expenses of the Company incurred in the
ordinary course of business, which have been paid by and are
reimbursable to HarbourVest Advisers L.P. at 31 July 2020 and 31
January 2020, respectively.
Board-related expenses, primarily compensation, of $261,450 and
$278,582 were incurred during the periods ended 31 July 2020 and
2019, respectively.
Note 10 Indemnifications
General Indemnifications
In the normal course of business, the Company may enter into
contracts that contain a variety of representations and warranties
and which provide for general indemnifications. The Company's
maximum exposure under these arrangements is unknown, as this would
involve future claims that may be made against the Company that
have not yet occurred. Based on the prior experience of the
Investment Manager, the Company expects the risk of loss under
these indemnifications to be remote.
Investment Manager Indemnifications
Consistent with standard business practices in the normal course
of business, the Company has provided general indemnifications to
the Investment Manager, any affiliate of the Investment Manager and
any person acting on behalf of the Investment Manager or such
affiliate when they act in good faith, in the best interest of the
Company. The Company is unable to develop an estimate of the
maximum potential amount of future payments that could potentially
result from any hypothetical future claim, but expects the risk of
having to make any payments under these general business
indemnifications to be remote.
Directors' and Officers' Indemnifications
The Company's Articles of Incorporation provide that the
Directors, managers or other officers of the Company shall be fully
indemnified by the Company from and against all actions, expenses
and liabilities which they may incur by reason of any contract
entered into or any act in or about the execution of their offices,
except such (if any) as they shall incur by or through their own
negligence, default, breach of duty, or breach of trust,
respectively.
Note 11 Subsequent Events
In the preparation of the Interim Financial Statements, the
Company has evaluated the effects, if any, of events occurring
after 31 July 2020 and before 26 November 2020, the date that the
Interim Financial Statements were issued.
In October and November 2020, HVPE agreed to participate in
three potential transactions as a result of the Company's existing
commitments to HarbourVest funds. The combined commitment in
principle is up to $34.3 million, however, these deals are subject
to completion, and could also be scaled-back. It is anticipated
that these transactions will close on or before 31 December.
Further information will be provided in the estimated monthly NAVs
as and when the transactions complete.
There were no other events or material transactions subsequent
to 31 July 2020 that required recognition or disclosure in the
Interim Financial Statements.
Disclosures
INVESTMENTS
The companies represented within this report are provided for
illustrative purposes only, as example portfolio holdings. There
are over 9,500 individual companies in the HVPE portfolio, with no
one company comprising more than 1.8% of the entire portfolio.
The deal summaries, General Partners (managers), and/or
companies shown within the report are intended for illustrative
purposes only. While they may represent an actual investment or
relationship in the HVPE portfolio, there is no guarantee they will
remain in the portfolio in the future.
Past performance is no guarantee of future returns.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements.
Forward-looking statements relate to expectations, beliefs,
projections, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not
historical facts. In some cases, forward-looking statements can be
identified by terms such as "anticipate", "believe", "could",
"estimate", "expect", "intend", "may", "plan", "potential",
"should", "will", and "would", or the negative of those terms, or
other comparable terminology. The forward-looking statements are
based on the Investment Manager's beliefs, assumptions, and
expectations of future performance and market developments, taking
into account all information currently available. These beliefs,
assumptions, and expectations can change as a result of many
possible events or factors, not all of which are known or are
within the Investment Manager's control. If a change occurs, the
Company's business, financial condition, liquidity, and results of
operations may vary materially from those expressed in
forward-looking statements.
By their nature, forward-looking statements involve known and
unknown risks and uncertainties because they relate to events, and
depend on circumstances, that may or may not occur in the future.
Forward-looking statements are not guarantees of future
performance. Any forward-looking statements are only made as at the
date of this document, and the Investment Manager neither intends
nor assumes any obligation to update forward-looking statements set
forth in this document whether as a result of new information,
future events, or otherwise, except as required by law or other
applicable regulation.
In light of these risks, uncertainties, and assumptions, the
events described by any such forward-looking statements might not
occur. The Investment Manager qualifies any and all of its
forward-looking statements by these cautionary factors.
Please keep this cautionary note in mind while reading this
report.
Some of the factors that could cause actual results to vary from
those expressed in forward-looking statements include, but are not
limited to:
-- the factors described in this report;
-- the rate at which HVPE deploys its capital in investments and
achieves expected rates of return;
-- HarbourVest's ability to execute its investment strategy,
including through the identification of a sufficient number of
appropriate investments;
-- the ability of third-party managers of funds in which the
HarbourVest funds are invested and of funds in which the Company
may invest through parallel investments to execute their own
strategies and achieve intended returns;
-- the continuation of the Investment Manager as manager of the
Company's investments, the continued affiliation with HarbourVest
of its key investment professionals, and the continued willingness
of HarbourVest to sponsor the formation of and capital raising by,
and to manage, new private equity funds;
-- HVPE's financial condition and liquidity, including its
ability to access or obtain new sources of financing at attractive
rates in order to fund short-term liquidity needs in accordance
with the investment strategy and commitment policy;
-- changes in the values of, or returns on, investments that the
Company makes;
-- changes in financial markets, interest rates, or industry,
general economic or political conditions; and
-- the general volatility of the capital markets and the market
price of HVPE's shares.
PUBLICATION AND CALCULATION OF NET ASSET VALUE
The NAV of the Company is equal to the value of its total assets
less its total liabilities. The NAV per share is calculated by
dividing the NAV of the Company by the number of shares in issue.
The Company intends to publish the estimated NAV per share as
calculated, monthly in arrears, as at each month end, generally
within 20 days.
REGULATORY INFORMATION
HVPE is required to comply with the Listing, Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority in the
United Kingdom (the "LDGT Rules"). It is also authorised by the
Guernsey Financial Services Commission as an authorised closed-end
investment scheme under the Protection of Investors (Bailiwick of
Guernsey) Law, 1987, as amended (the "POI Law"). HVPE is subject to
certain ongoing requirements under the LDGT Rules and the POI Law
and certain rules promulgated thereunder relating to the disclosure
of certain information to investors, including the publication of
annual and half-yearly financial reports.
VALUATION POLICY
Valuations Represent Fair Value Under US GAAP
HVPE's 31 July 2020 NAV is based on the 30 June 2020 NAV of each
HarbourVest fund, Absolute,(1) and Conversus, adjusted for changes
in the value of public securities, foreign currency, known material
events, cash flows, and operating expenses during July 2020. The
valuation of each HarbourVest fund is presented on a fair value
basis in accordance with US generally accepted accounting
principles ("US GAAP"). See Note 4 in the Notes to the Unaudited
Condensed Interim Consolidated Financial Statements on page 47.
The Investment Manager typically obtains financial information
from 90% or more of the underlying investments for each of HVPE's
HarbourVest funds to calculate the NAV. For each fund, the
accounting team reconciles investments, distributions, and
unrealised/realised gains and losses to the Financial Statements.
The team also reviews underlying partnership valuation
policies.
Management of Foreign Currency Exposure
The Investment Portfolio includes three euro-denominated
HarbourVest funds and a Canadian dollar-denominated fund. 16.4% of
underlying portfolio holdings are denominated in euros. The
euro-denominated Investment Pipeline is EUR22 million.
-- 2.2% of underlying portfolio holdings are denominated in
sterling. There is no sterling-denominated Investment Pipeline.
-- 1.1% of underlying portfolio holdings are denominated in
Australian dollars. There is no Australian dollar-denominated
Investment Pipeline.
-- 0.3% of underlying portfolio holdings are denominated in
Swiss francs. There is no Swiss franc-denominated Investment
Pipeline.
-- 0.5% of underlying portfolio holdings are denominated in
Canadian dollars. The Canadian dollar-denominated Investment
Pipeline is C$16 million.
HVPE has exposure to foreign currency movement through foreign
currency-denominated assets within the Investment Portfolio and
through its Investment Pipeline of unfunded commitments, which are
long term in nature. The Company's most significant currency
exposure is to euros. The Company does not actively use derivatives
or other products to hedge the currency exposure.
1 Absolute, referred to as "HVPE Avalon Co-Investment L.P." in
the Unaudited Condensed Interim Consolidated Schedule of
Investments, has been fully realised. However, $466,198 remains in
escrow.
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END
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