Over the course of 2024, the board of HarbourVest Global Private Equity (HVPE) says it consulted extensively, listened to and reflected on the views of a broad range of shareholders. The board strongly believes in the importance of funds such as HVPE in democratising private equity ownership for all investors. However, it shares the frustrations of shareholders regarding the trust’s discount, and has explored a range of options to deliver improved share price returns.

On 1 February 2024, HVPE announced its 15% distribution pool to fund future share buybacks or return capital to shareholders by means of special dividends. Between 1 January and 31 December 2024, HVPE repurchased $90 million worth of shares, actively engaging in buybacks on 132 of the 254 trading days during the period. This is the second largest buyback by percentage of NAV and the largest by absolute amount among any of HVPE’s direct peers. That contributed to a 12.5% uplift in the share price.

Doubling allocation to distribution pool

The board has decided to double the allocation of cash realisations from HVPE’s portfolio to the distribution pool, increasing from 15% to 30%, which is expected to be used for share buybacks.

Following the rebound in realisation activity that began in H2 2024, HVPE’s forecast for portfolio distributions in 2025 is $609m, based on a conservative assumption that just under 16% of current NAV will be realised (the 10-year average is 19%). At this level of portfolio distributions, shareholders would see a total of $235m potentially available for share buybacks in 2025, inclusive of $183m allocated to the distribution pool during the calendar year and the existing balance of $52m. The board believes that the distributions facilitated through the pool will make a material difference to shareholders’ returns, ensuring they benefit more directly from the strong value growth delivered by HVPE’s high quality portfolio.

The distribution pool allocation will be reviewed annually, and the Board will continue to monitor the situation closely to ensure that the best possible outcomes are achieved for shareholders.

The updated distribution policy will take effect from 1 February 2025.

Separately managed account (SMA)

Capital will be deployed by the manager via a dedicated HVPE vehicle directly into third party managed general partner (GP) funds, secondary opportunities and co-investments. The board thinks that this arrangement will simplify HVPE’s investment structure over time.

The benefits of an SMA would include greater flexibility in the deployment of capital, an enhanced ability to allocate investments in line with approved strategic asset allocation targets, greater control over portfolio liquidity, and a substantial reduction in embedded leverage.

Continuation vote

The board also confirms that it will introduce a continuation vote, which will be put to shareholders at the Annual General Meeting in July 2026.

[Writing in Citywire last October, I told readers that I had bought some HarbourVest shares, believing that it was trading on far too wide a discount – about 42% at the time. Over the past few months, that has narrowed in to 38%, but there is still a long way to go before this trust looks fairly valued to me. These proposals seem sensible (although I have to admit that I don’t understand the benefit of the SMA) If you also have questions, there’s a live presentation for shareholders via Investor Meet at 3.00 p.m. on 4 February 2025. Investors will be able to register to attend here: https://www.investormeetcompany.com/harbourvest-global-private-equity-limited/register-investor]

HVPE : Habourvest shake up to narrow discount