Update on shareholder distribution policy
1 February 2024
This announcement contains information that qualifies or may qualify as inside information under the UK Market Abuse Regulation and the EU Market Abuse Regulation. The person responsible for arranging the release of this announcement on behalf of HarbourVest Global Private Equity Limited is Jasper Cross, Company Secretary.
HARBOURVEST GLOBAL PRIVATE EQUITY LIMITED
("HVPE" or the "Company")
Update on shareholder distribution policy and capital allocation
· Launch of new Distribution Pool to fund future share buybacks or return capital to shareholders by means of special dividends
· New shareholder distribution policy will free up materially more cash for shareholders to bolster their returns through the cycle
· The Distribution Pool will be funded from cash realisations, with 15% of the total to be allocated going forward
· New commitments will be sized to preserve balance sheet strength and liquidity
HVPE, a FTSE 250 investment company with global exposure to private companies, managed by HarbourVest Partners, today announces a new shareholder distribution policy as part of its broader capital allocation approach. The Board and Investment Manager believe that this new policy will help to optimise total shareholder returns through the cycle by ring-fencing capital to be returned to shareholders.
Background
HVPE's investment objective is to generate superior shareholder returns through long-term capital appreciation by investing primarily in a diversified portfolio of private markets investments. The Investment Manager aims to deliver material outperformance of the public markets through the cycle. In the ten years to 31 December 2023, HVPE delivered growth in net asset value ("NAV") per share of 261%, while the FTSE All World Total Return Index returned 127% (all USD). However, the full benefit of this outperformance has not been reflected in the Company's share price, which has traded at a significant discount to NAV for an extended period.
The Board appreciates this has been a challenging time and as a result will be launching a new distribution policy to help bolster returns for shareholders. The Company's first buyback programme was initiated in September 2022 and since then HVPE has repurchased approximately $57 million worth of shares, with a further $12 million of cash allocated for repurchases under the current programme. In total, these buybacks resulted in NAV per share accretion of 1.3%.
Further to the announcement of 26 October 2023, the Board has engaged with a large number of shareholders and other stakeholders to explore ways to allow shareholders to participate more directly in NAV growth, including the possibility of distributing on a regular basis some of the proceeds generated by natural cash realisations in HVPE's portfolio. During these discussions, the Board noted a range of views, with some support for the introduction of a dividend. On balance, shareholders have expressed a preference for share buybacks over dividends at the current level of discount, in view of the potential benefit arising from the resulting NAV per share accretion for continuing shareholders.
Launch of distribution pool for share buybacks or special dividends
The Board has reviewed several options in response to shareholder feedback, taking into account the important considerations of preserving balance sheet strength and managing liquidity risk. As a result, the Board has decided to introduce a new distribution policy and to establish a distribution pool (the "Distribution Pool"). The Distribution Pool will be funded by a proportion of the cash realisations from the Company's portfolio going forward, with this proportion set initially at 15%.
The Distribution Pool will accumulate on a rolling basis, up to a maximum balance set by the Board. The Distribution Pool will be deployed for share buybacks and/or special dividends at the sole discretion of the Independent HVPE Board Directors (the "Distribution Group"). When determining the timing, amount and nature of a shareholder distribution, the Distribution Group will consider the macroeconomic environment, the discount to NAV at which HVPE's shares are trading (both in absolute terms and relative to peers), market sentiment, and the relative merits of distributing capital against the potential benefit of committing to new investment opportunities.
By way of illustration, at times when the discount is deemed especially wide, the Distribution Group may elect to distribute the cash in the form of share buybacks. Alternatively, a special dividend may be the preferred option. Equally, the Distribution Group may choose to retain the Distribution Pool for an extended period to preserve capacity ahead of a future downturn, or allocate some of the cash for reinvestment. If the balance in the Distribution Pool reaches the maximum, the ongoing 15% allocation from portfolio distributions will be diverted to new investment until such time as the balance falls below the maximum, at which point the 15% allocation will once again be used to replenish the Distribution Pool.
In establishing this new distribution policy, the Board's intention is to optimise the long-term total return for shareholders through the cycle while preserving the strength of the balance sheet.
In 2023, total commitments were reduced considerably from the original plan, ending the year at $295 million, in response to the low level of portfolio exit activity during the year. The Investment Manager has presented a plan for 2024, approved by the Board, based on a prudent level of new commitments with a view to enhancing near-term cash flow. Furthermore, a specific proposed commitment by HVPE has been placed on hold, thereby releasing a material cash sum as an additional, near-term allocation to the Distribution Pool. We expect that the total amount of cash allocated to the Distribution Pool in 2024 will be materially greater than the amount distributed via buybacks since September 2022. For reference, total proceeds received from cash realisations in the portfolio averaged $568 million per annum over the last three calendar years.
It is the Board's intention that the new distribution policy will take effect from 1st February 2024. Any unspent cash allocated to share buybacks under the current programme will be rolled into the Distribution Pool on that date.
The Distribution Pool will not take the form of a segregated cash account. Rather, in the interests of balance sheet efficiency, the Distribution Pool will be held as part of HVPE's total liquid resources and tracked from month to month.
Ed Warner, Chair of HVPE, commented:
"We have engaged actively with shareholders in recent months and are grateful for their feedback. I have personally spoken to a number of our shareholders and I share the concern many have with the wide discount at which the shares have traded over an extended period of time.
The Board have listened carefully and today we are pleased to announce a new distribution policy. This will make available substantial funds for deployment by the Board for the direct benefit of shareholders, with the clear aim of optimising shareholder returns through the cycle while preserving balance sheet strength.
We believe that this new, more flexible policy, including the potential to pay dividends for the first time since HVPE was created, will make a significant difference to shareholders. It will help ensure that they benefit more directly from the strong value growth delivered by HVPE's high quality portfolio, which has consistently outperformed public market benchmarks over the long term."
- ENDS -
LEI: 213800NBWV6WWV8TOL46
Enquiries:
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Shareholders |
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Richard Hickman |
Tel: +44 (0)20 7399 9847 |
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Media |
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HarbourVest Partners |
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Lily Cabianca |
Tel: +44 (0)20 7151 4261 |
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MHP |
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Charlie Barker / Robert Collett-Creedy |
Tel: +44 7834 623 818 |
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 over 40 years of experience.
About HarbourVest Partners, LLC:
HarbourVest is an independent, global private markets firm with 40 years of experience and more than $117 billion of assets under management as of September 30, 2023. Our interwoven platform provides clients access to global primary funds, secondary transactions, direct co-investments, real assets and infrastructure, and private credit. Our strengths extend across strategies, enabled by our team of more than 1,000 employees, including more than 200 investment professionals across Asia, Europe, and the Americas. Across our private markets platform, our team has committed more than $58 billion to newly-formed funds, completed over $50 billion in secondary purchases, and invested over $37 billion in directly operating companies. We partner strategically and plan our offerings innovatively to provide our clients with access, insight, and global opportunities.
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.
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 no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results.
This announcement is issued by the Company, whose registered address is BNP Paribas House, St Julian's Avenue, St Peter Port, Guernsey, GY1 1WA
© 2024 HarbourVest Global Private Equity Limited. All rights reserved.
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