HarbourVest Global Private Equity (HVPE) has agreed to hold a $400 million tender offer in the autumn to secure support for its first continuation vote in July.
The tender is among a flurry of fresh initiatives to boost returns and address a near-30% share price discount to net asset value (NAV).
Private equity fund investor HVPE offers exposure to exciting growth companies including Revolut, Databricks and SpaceX. But the FTSE 250 trust is under pressure from activists Asset Value Investors and Saba, the US hedge fund seeking to take control of Edinburgh Worldwide (EWI), Herald (HRI) and Impax Environmental Markets (IEM).
Subject to HVPE passing its July 2026 continuation vote, the tender offer will allow shareholders to sell shares at around 10% below NAV. The tender follows HVPE’s announcement in December that it will sell $300 million worth of fund investments from its portfolio.
Combined with ongoing share buybacks, HVPE plans to return ‘at least’ $500 million to shareholders this year, or 12% of assets. This will double to $1 billion by the time of a second continuation vote, which it has promised to hold by July 2029, as the board has also committed to distribute 5% to 10% of NAV annually up to that point.
Discounts in the private equity sector remain too wide and returns in recent years have been lacklustre. In recognition of the challenges facing the private equity sector and its ongoing cash requirements, HVPE will put new investments on pause for the remainder of 2026.
Bold step forward
Chair Ed Warner said: ‘HVPE shares are near an all-time high but currently trade on a wide discount to NAV. We believe the initiatives announced today represent a bold step forward in narrowing that gap and enhancing returns for shareholders.’
Warner added: ‘The scale of the tender offer we are launching is unprecedented in our sector, and it reflects the confidence we have in HVPE’s ability to generate liquidity.
‘The board continually assesses a wide range of strategic options to enhance shareholder value, and these initiatives reflect the board’s commitment to a closer correlation between the company’s NAV and share price.’
Analyst views
QuotedData’s James Carthew said: ‘Investors have been demanding action and, having introduced a continuation vote, HVPE is trying to step up. However, I cannot help wondering if the pendulum is swinging too far in favour of focusing on discount control.
‘No new investments this year and much constrained new investments in subsequent years could hamstring the trust’s ability to drive its NAV returns for the foreseeable future.’
Winterflood’s Shavar Halberstadt commented: ‘The expected frequency of secondary sales will be useful to “prove the NAV”, but will need to be weighed carefully against future growth prospects; after all, the fund’s exposure to high-growth names such as SpaceX, Revolut or Databricks may have screened as an attractive disposal just a few years ago.
‘Bottom line, these measures should ensure survival at the June continuation vote, and please shareholders with a desire for liquidity and NAV validation, but care needs to be taken to not cannibalise what remains a strong proposition.’
Learn about the trust here: https://www.hvpe.com/
You might also like these stories:
