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Harbourvest Global Private Equity — Net Asset Value 2011
Jan 18, 2011
6273_iss_2011-01-14_d1ed37f9-f0ba-48ea-924b-171de9bb6961.pdf
Net Asset Value
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Monthly Update
Company Overview
HarbourVest Global Private Equity Limited ("HVPE" or the "Company") is a Guernsey-incorporated, closed-end investment company listed on the Specialist Fund Market ("SFM") of the London Stock Exchange and Euronext Amsterdam. HVPE is designed to offer shareholders superior, long-term capital appreciation while avoiding undue risk by investing in a diversifi ed portfolio of private equity investments. The Company is managed by an affi liate of HarbourVest Partners, LLC ("HarbourVest"), a leading private equity fund-of-funds manager. The HarbourVest team has managed private equity investments for 28 years, gaining invaluable expertise and developing long-term relationships with high quality managers.
31 December 2010 30 November 2010 Change
SUMMARY OF ECONOMIC NET ASSET VALUE ("ECONOMIC NAV"1 )
(in millions except per share and last traded price data)
| Estimated NAV of Investments | \$881.8 | \$850.8 | \$31.0 |
|---|---|---|---|
| Cash and Cash Equivalents | 11.3 | 25.6 | (14.3) |
| Outstanding Debt | (90.6) | (100.6) | 10.0 |
| Net Other Assets (Liabilities) | (1.2) | (1.5) | 0.3 |
| Estimated Economic NAV | \$801.3 | \$774.3 | \$27.0 |
| Estimated Economic NAV per Share (83.0 million shares outstanding) | \$9.65 | \$9.33 | \$0.32 |
| Last Traded Price (Euronext)2 | \$5.75 | \$5.75 | — |
| Last Traded Price (LSE)3 | \$5.63 | \$4.85 | \$0.78 |
| SUMMARY OF COMMITMENTS | |||
| Unfunded Commitments (Allocated to Underlying Partnerships) | \$380.5 | \$407.9 | (\$27.4) |
| Unfunded Commitments (Not Allocated to Underlying Partnerships) | 164.3 | 167.2 | (2.9) |
| Total Unfunded Commitments | \$544.8 | \$575.1 | (\$30.3) |
| Estimated NAV of Investments + Total Unfunded Commitments | \$1,426.6 | \$1,425.9 | \$0.7 |
| % Invested | 110% | 110% | — |
| Commitment Level (Total Unfunded Commitments)4 | 178% | 184% | (6%) |
| Commitment Level (Allocated to Underlying Partnerships)5 | 158% | 163% | (5%) |
| Cash + Unused Committed Credit Facility | \$420.7 | \$425.0 | (\$4.3) |
| Cash + Remaining Available Credit Facility6 | \$420.7 | \$425.0 | (\$4.3) |
1 The Company's investment manager believes that Economic NAV per share is the most appropriate measure of economic value for investors. Economic NAV excludes the "fair value" of liabilities, booked under U.S. GAAP, related to Put Rights the Company has issued in connection with its Liquidity Plan. Upon maturity of the Put Rights on 15 November 2011, the Company has the contingent obligation, at the option of the holder, to purchase up to 6,745,061 shares of its stock at the lower of \$5.75 per share or the estimated Economic NAV per share as at 31 October 2011. Economic NAV per share refl ects the most conservative outcome upon maturity of the Put Rights. If the Put Rights expire without being exercised, U.S. GAAP NAV per share would equal the reported Economic NAV per share. If the Put Rights are exercised at maturity, pro forma U.S. GAAP NAV per share would equal \$10.01, an increase of 3.6% over current Economic NAV per share. As at 31 December 2010, HVPE's estimated NAV per share reported under U.S. GAAP ("U.S. GAAP NAV") is \$9.60. Valuation of the "fair value" of Put Rights is based on the most recent trade prior to month end on either the LSE or Euronext.
2 Last trade prior to 30 November 2010 and 31 December 2010 took place on 25 November 2010.
3 Last trade prior to 30 November 2010 took place on 18 November 2010; last trade prior to 31 December 2010 took place on 23 December 2010.
4 Refl ects the estimated NAV of investments plus total unfunded commitments divided by estimated Economic NAV.
5 Refl ects the estimated NAV of investments plus unfunded commitments (allocated to underlying partnerships) divided by estimated Economic NAV.
6 Available credit facility refl ects amount available subject to most restrictive covenant limit applicable.
HVPE is expected to continue to make investments in and alongside existing and newly-formed HarbourVest funds as they come to market. HarbourVest's funds typically invest their capital in primary partnerships, secondary investments, and direct investments across vintage years, strategies, geographies, and industries.
Economic Net Asset Value
As at 31 December 2010, HVPE's estimated Economic Net Asset Value ("Economic NAV") per share is \$9.65, a 3.4% inc rease from 30 November 2010 (\$9.33). This change resulted primarily from a positive valuation adjustment (\$0.27 per share) taken by the HarbourVest funds to refl ect the investment manager's preliminary estimate of year-end 2010 valuation increases and positive foreign currency movement (\$0.07 per share). The gains were partially offset by ongoing operating expenses (\$0.02 per share). The year-end 2010 estimate includes unrealised valuation increases for underlying investments in venture companies Facebook, Inc. and Groupon, Inc. and a valuation decrease for buyout investment Nycomed SCA-SICAR. During December, the euro appreciated 3.1% against the U.S. dollar, and the MSCI World Index (USD) increased 7.2%.
Balance Sheet and Commitments
During December, HVPE did not make any new commitments or purchase additional interests in HarbourVest-managed funds. The Company continued to benefi t from ongoing investments made by the actively-investing HarbourVest funds in its portfolio, which made commitments to several U.S. primary venture partnerships, two secondary European buyout investments, and two direct buyout investments.
Following four consecutive months of positive cash fl ows, HVPE funded \$35.0 million of capital calls to U.S. and international fund-of-funds, a direct fund, and the global secondary fund during December. The Company received \$31.6 million in distributions from 15 of the 24 HarbourVest funds in the portfolio, resulting in net negative cash fl ows of \$3.4 million. The capital call and distribution totals were the highest since HVPE's inception. The largest capital call was funded to global secondary fund Dover VII, which made a number of new commitments during the fourth calendar quarter of 2010. The largest distributions were received from HarbourVest VI Partnership and HIPEP III Partnership. Both of these mature fund-of-funds distributed proceeds from the December 2010 sale of Isilon Systems, Inc. (ISLN) to EMC Corporation (EMC) for approximately \$2.25 billion. As noted in the HVPE's Monthly Update at 30 November 2010. Isilon was HVPE's 16th largest underlying company as at 31 July 2010 and is held through multiple managers via primary and secondary positions.
Liquidity events continued across HVPE's underlying portfolio during December with 32 transactions. Six underlying companies completed IPOs during the month, including direct holding FleetCor Technologies, Inc. (NYSE: FLT). 26 portfolio companies completed sale transactions. Additionally, Jerusalem Venture Partners and Accel Europe both sold 30% of their holdings in Qlik Technologies, Inc. (NASDAQ: QLIK), realising approximately 40 times and 35 times the initial investment, respectively. Qlik was one of HVPE's largest underlying companies at 31 July 2010. HVPE expects to receive proceeds from the sale in the near term.
HVPE's unfunded commitments of \$544.8 million decreased by \$30.3 million during December as a result of capital calls, offset by foreign currency movement. Of the total unfunded commitments, approximately \$380.5 million has been committed by HarbourVest funds to underlying partnerships, while the remaining \$164.3 million has not yet been committed.
During December, the Company repaid \$10.0 million of outstanding borrowing against its \$500.0 million credit facility, which is committed until December 2014 and subject to certain covenants. As at 31 December 2010, a total of \$90.6 million is outstanding, a \$10.0 million decrease from 30 November as a result of the repayment. As at 31 December 2010, HVPE's cash (\$11.3 million) and remaining available credit facility (\$409.4 million) totals \$420.7 million. This represents 111% of commitments allocated to underlying partnerships and 77% of total commitments (compared to 104% and 74%, respectively, at 30 November).
Portfolio Diversifi cation NAV
Consistent with HVPE's investment objective, the investment manager strives to manage risk through diversifi cation within the portfolio. The charts below illustrate the breakdown of HVPE's investment portfolio based on NAV as at 31 December 2010. HVPE's buyout investments remained at 60% of the portfolio at 31 December 2010, and venture investments remained at 35%. U.S. investments remained at 65% of the portfolio, and European investments remained at 27%. The NAV is split approximately 60% in primary partnerships, 22% in secondary investments, and 18% in direct investments.
PORTFOLIO DIVERSIFICATION AT 31 DECEMBER 2010
Diversifi cation charts add to 100%.
Notes The diversifi cation by net asset value analysis is based on the fair value of the underlying investments, as estimated by the investment manager. Diversifi cation by strategy, vintage, and geography is based on the estimated net asset value of partnership investments within HVPE's fund-of-funds and company investments within HVPE's direct funds. Industry diversifi cation is based on the reported value of the underlying company investments for both fund-of-funds and direct funds. Some of the funds held in HVPE have not been fully invested. The composition of investments by strategy, vintage, industry, and geography may change as additional investments are made and existing investments are realised.
Large buyout includes funds of more than \$7 billion in size, medium buyout includes those between \$1 billion and \$7 billion in size, and small buyout includes those less than \$1 billion in size. Direct investments in operating companies are categorised by deal size.
Valuation Methodology HVPE carries its investments at fair value in accordance with U.S. generally-accepted accounting principles. HVPE's investment manager uses the best information it has available to estimate fair value. Fair value for private equity assets is based on the most recent fi nancial information provided by the investment manager, adjusted for known investment operating expenses and subsequent transactions, including capital calls, distributions, changes in foreign currency exchange rates, and changes in value of public securities. Valuation adjustments are made for known signifi cant events, if any, that affect the fair value of the investments. The 31 December 2010 estimated NAV is based on estimated investment values at 31 December 2010, including a positive valuation adjustment, for company investments within HVPE's direct funds and partnerships within HVPE's fund-of-funds.
HVPE is registered with the Dutch Authority for the Financial Markets as a collective investment scheme which may offer participations in The Netherlands pursuant to article 2:66 of the Financial Markets Supervision Act (Wet op het fi nancieel toezicht). All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, fi nancial, tax, and other professional advice before making any investment decision. The value of investments may fl uctuate. Results achieved in the past are no guarantee of future results.
This document is not intended to be an investment advertisement or sales instrument; it constitutes neither an offer nor an attempt to solicit offers for the securities described herein. This report was prepared using fi nancial information contained in HVPE's books and records as of the reporting date. This information is believed to be accurate but has not been audited by a third party. This report describes past performance, which may not be indicative of future results. HVPE does not accept liability for actions taken on the basis of the information provided.
Contacts
REGISTERED OFFICE
HarbourVest Global Private Equity Limited
Company Registration Number: 47907 Anson Place Mill Court La Charroterie St Peter Port Guernsey GY1 1EJ Tel +44 1481 722 260 Fax +44 1481 729 829
INVESTMENT MANAGER
HarbourVest Advisers L.P. c/o HarbourVest Partners, LLC One Financial Center 44th Floor Boston MA 02111 U.S.A. Tel +1 617 348 3707 Fax +1 617 350 0305 Attention: Steve Belgrad, CFO [email protected]
KEY INFORMATION
Exchanges Euronext Amsterdam & London Stock Exchange Ticker HVPE Listing Date 6 December 2007 (Euronext) 12 May 2010 (LSE) Fiscal Year End 31 January Base Currency U.S. Dollars ISIN GG00B28XHD63 Bloomberg HVPE NA, HVPE LN Reuters HVPE.AS, HVPE.L Common Code 032908187 Amsterdam Security Code 612956