Harbourvest Global Priva... Share Discussion Threads

[skyship] 23/2/2024 13:58

riverman - I bt back into ICGT today - posted over on their thread.

[riverman77] 23/2/2024 09:39

HVPE's plans got a lukewarm reception from analysts so that probably explains the pullback. They could have certainly done more. Looks very cheap again, although not sure it's going to massively rerate anytime soon. ICGT currently my pick as they pay a reasonable dividend and doing buybacks, while on a wider discount than most of its peers.

[apple53] 23/2/2024 09:30

Discount has opened up again and is materially higher than all its peers, with ICGT probably the closest.
MSCI World is up 17% since end September, which remains the valuation date for 92% of the portfolio in today's end Jan statement. If you assume that half of this jump in global markets feeds into valuations if done today, then NAV would be £42.3 vs today's published £39.2. If you do the same calculation for PIN (but based on end Dec NAV), today's NAV would be 517p. I try to do the same for the other peers, and generally discounts are 30-40%. For ICGT the same calculation is based on end July world MSCI, and results in £20.63.
Please note that in terms of published data even when we move the majority of HVPE (and PIN) valuations forward, which we will presumably only get in April for end March (??), we will still only have valuations based on end December, and World MSCI is up 5% since then.

I am not attempting to comment on whether HVPE's discount deserves to be higher than its peers.

[donald pond] 19/2/2024 09:04

HVPE is clearly a high quality long term play at a very large discount. However, the response to the recent news on buybacks was very predictable. The purpose of buybacks has to be value creation: PSH have bought back in size most days for many years and while it has done little to narrow the discount it improves the NAV all the time. BUT you have to buyback in size and consistently. PIN set out the model for PEs. The HVPE approach seems half-hearted and the market has seen through it. They don't really want to do it but all their shareholders have asked so OK, we'll do some. No good: either commit fully or don't bother.

[cerrito] 04/2/2024 20:24

I held HVPE about 8 years ago and was impressed by Harborvest when they managed £50m for a pension fund I was involved in the last decade but they have been out of sight out of mind for me till I read today the following in Citywire.
Will contain nothing new for many of you but interesting for some of you will be a good synopsis.
quote
HarbourVest Global Private Equity (HVPE) hopes to finally narrow its wide share price discount after it announced plans to return more capital to shareholders and move to a fully independent board.
In response to shareholder feedback, including from wealth manager Quilter Cheviot, which began red-carding weak boards last September, the global private equity investor will establish a ‘distribution pool’ funded by profits on disposals that will be used for share buybacks and special dividends.
The board and manager have agreed that 15% of cash realisations will go to the pool, which launches immediately, helped by a decision to place on hold a ‘specific̵7; investment commitment that releases a ‘material cash sum’.
The company has languished on a discount of about 40% since 2022, giving the £3.1bn portfolio of funds and direct company stakes a market value of £1.8bn.
A £25m buyback plan launched last May did nothing to move the dial. HVPE has purchased £45m worth of shares since September 2022 but expects the returns from the pool to be ‘materially greater’. As an indication, it said total annual cash proceeds received from disposals averaged $568m (£448.9m) over the last three calendar years.
HVPE said that in deciding the timing, amount and nature of distributions, it would take into account the macroeconomic environment, the discount, market sentiment and ‘relative merits of distributing capital against the potential benefit of committing to new investment opportunities’.
Ed Warner, chair of HVPE, said he had ‘engaged actively’ with shareholders in coming up with the proposals, and that the ‘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 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,’ he said.
HVPE has delivered total underlying returns of 121% and 349% over five years and 10 years respectively, compared with the MSCI World, which rose 77% and 210%. However, investors haven’t reaped all the benefit as the shares have returned 62% and 254% over the same periods.
Activity from the private equity sector has picked up in recent months after Pantheon International (PIN) was applauded by analysts for its ‘bold’ £200m buyback plan, with the board called ‘a leader’ in the space. Earlier this month, Abrdn Private Equity (APEO) said it was planning to use proceeds from selling its stake in Dutch discount retailer Action to start a buyback programme.
Board independence
The investment company also improved its governance structure following feedback from shareholders, including wealth manager Quilter Cheviot, who holds 4.6% of shares.
Carolina Espinal, a managing director at HVPE, will not stand for re-election as a non-executive director at the annual general meeting in July. As a result, the board will be fully independent of its investment manager.
However, Espinal and Richard Hickman, another managing director at HVPE, will be non-voting participants of the board and join the investment committee alongside managing director John Toomey and chief investment officer Greg Steno.
‘Board independence is an increasingly important area of focus for investors and I am confident HVPE will be viewed as having adopted best practice in this regard,’ said Warner.
In September, the wealth management firm said it was opposed to employees of a trust’s fund manager sitting on the board as a non-independent as it set out its wider expectations for boards of the sector.
Gemma Woodward, head of responsible investment at Quilter Cheviot, said she had engaged with the private equity company on independence and was ‘really pleased to see HVPE’s board take the move to become fully independent’.
‘It is good to see the power proactive engagement can have to help get boards acting in the interests of shareholders,’ said Woodward. ‘This sets a strong example to other trusts within the sector, which continue to have manager representation on the board.’
Quilter Cheviot’s sister company Quilter Investors also has a stake in HVPE with 2.5% of shares.
Other large shareholders include M&G with 7.5%, Evelyn Partners and Lothian pension fund with 5.6% apiece, and Schroders with 5%.

[apple53] 03/2/2024 21:18

Shame but I had to flip some of my recent purchases as in desperate need of cash. I was, however, fortunate that it was yesterday afternoon that I realised and I didn't trade til 4:12 so I got 2382. I always plan to hold forever but if the discount closes towards 30% but opens elsewhere......

By the way I think HVPE have come a long way in 3-4 years in their thinking. Yes it's been slow, but I imagine there are internal barriers to each step, whether or not they are driven by a desire to avoid slowing fee growth by spending.

[arja] 03/2/2024 15:04

surprisingly big move on friday in not exactly a bullish overall market . probably a pullback on monday on profit takinng but one can never be sure in markets :)

[riverman77] 02/2/2024 17:45

As expected a nice rise after a short delay for markets to digest the news.

[cousinit] 01/2/2024 11:06

This does feel like a positive move. While by no means perfect it does seem like there has been a significant shift in approach.

If they have managed to 'skip' an existing commitment and have scaled back new commitments that should provide headroom for decent buybacks (which can accelerate).

[chc15] 01/2/2024 10:30

I bought a little earlier, encouraging news.

[riverman77] 01/2/2024 09:39

Good to see HVPE follow the likes of PIN and APEO in retuning cash to shareholders. I think a distribution pool is a sensible approach - gives them flexibility to adjust the amount of returns depending on the level of realisations, and also decide whether to go for dividends or buybacks depending on level of discount. The last thing you want is for them to commit to a fixed dividend which they then have to cut, for example if realisations temporarily dry up. The fact they have put in place a fully independent board to oversee all this is another positive.

Also worth noting - the total amount of cash allocation to the Pool in 2024 will be materially greater than the amount spent on buybacks since Sep 22. The buybacks were worth 1. 3% so hopefully at least 2.5% to 3%.

They say the average realisations over past 3y is 568m USD - 15% of this would represent a roughly 3.8% shareholder return at current market price. Not bad.

[donald pond] 01/2/2024 09:37

Fwiw I prefer buybacks to dividends but you have to take the PSH approach and go big for years and years. I'd be quite happy if they stopped all new commitments and said everything will be spent on buybacks until discount is below 5%. What would be the worst outcome is if this is just lip service and they announce similar size buybacks to those in recent years.

[donald pond] 01/2/2024 09:26

It's a first step in the right direction. But as John Singer said in his recent interview on the Money makers podcast, if you are trading at a 40% discount to NAV, the starting point must be to either improve that or wind up.

[donald pond] 01/2/2024 07:42

Well, realisations to fund a pool to be used for returning cash to shareholders. We just need to secondary market to wake up and should be off to the races

[lynton3] 31/1/2024 23:27

I found this in Peel Hunt's 2024 recs on Citywire. Has anyone seen any other reference to HVPE looking at implementing a dividend policy?

Peel Hunt’s corporate client HarbourVest Global Private Equity (HVPE) ... The board has bought back 2.2m shares over the last 18 months for £48m, but still trades 39% below par and is in discussions with shareholders about a potential dividend policy to be funded by realisations.

[apple53] 30/1/2024 10:20

HVPE has slipped again vs others going sideways or up, so now has the highest discount by around 5pp (on my 'real time' NAV). So I have sold Herald and OSB to buy more HVPE. ii is giving me a great quote of 2314, close to the bid (spread 2310-30), which means essentially no spread and no stamp.

[riverman77] 08/11/2023 16:45

Or better commit to a small dividend - even paying out 2% of NAV each would give a near 4% yield at current share price.

[lynton3] 08/11/2023 16:41

Thanks, Nakinbuks, I did read it, and I was trying to make the point that HVPE needs to listen to Mr Singer's message and change its way of thinking. Maybe they can't do buybacks right now. But, right now, they can make a plan that will enable them to change and deliver meaningful buybacks in the near future.

[makinbuks] 08/11/2023 09:02

But lynton, read rambutan's post. HVPE doesn't have the option to follow Pantheon

[lynton3] 07/11/2023 18:02

The message from Mr Singer was loud and clear, and the HVPE board should wake up and smell the coffee (as they say).

Or does the board have clear evidence that HVPE's shareholders are so different from PIN's?

[rambutan2] 07/11/2023 16:19

PIN's balance sheet was very conservative ie net cash. HVPE's is currently a little stretched ie approx 15% geared. So little room for sizeable buybacks.

[lynton3] 07/11/2023 16:08

You should watch this video of the Chairman of Pantheon speaking about the buy back!

hxxps://citywire.com/investment-trust-insider/news/pantheon-s-john-singer-private-equity-must-do-hell-of-a-lot-more/a2429759?re=114465&refea=206187

[makinbuks] 26/10/2023 09:56

I agree, they have 200m borrowings no longer covered by cash on the BS so any returns have to come from sales

[cousinit] 26/10/2023 08:28

PIN were conservative in managing the balance sheet. HVPE made chunky commitments after the Covid hiatus. Suspect it'll take a year or two of moderating new commitments to build up some firepower for material cash returns.

At least they aren't still trying to explain why they are an unnecessary distraction!