News & Analysis

HarbourVest acquires debt stakes from Finnish insurer

The deal involved Varma Mutual Fund Pension selling part of its stakes in two MML Capital Partners mezzanine funds to the investment manager.

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HarbourVest Partners has picked up stakes in two debt funds from Finland’s largest pension insurance company, according to UK regulatory filings.

Helsinki-headquartered Varma Mutual Fund Pension Insurance Company, which has €44 billion in assets under management, sold parts of its interests in MML Capital Partners Funds V and VI to HarbourVest.

HarbourVest used five vehicles to acquire the stakes in the mezzanine debt funds: HarbourVest Dover Street IX Investment, HarbourVest Partners X Secondary, HarbourVest 2016 Holdings, HarbourVest Summit Hill Fund (Tranche 2) and HarbourVest 2016 Global AIF, the filings show.

The deals closed on 26 May. Pricing details were not disclosed.

MML Capital makes equity and debt investments of between €10 million and €50 million in companies that want to carry out “expansions, acquisitions, recapitalisations and management buyouts”, according to its website.

The firm invests alongside management teams, generally taking non-controlling stakes, according to its website. Historically, 70 percent of its capital has gone into debt, with the balance going into equity.

Fund V, which launched and closed in 2011, raised €252 million, according to PEI data. Investors include the European Investment Fund, with a €10 million contribution, and US foundation Fund for Wisconsin Scholars.

Fund VI, which closed on €438 million in March 2016 after 17 months of fundraising, attracted investors including the European Investment Bank, with a €60 million commitment, Boeing’s corporate pension fund and Baptist Foundation of Oklahoma.

In the second quarter of this year HarbourVest acquired a $100 million stake in distressed manager Black Diamond Capital Management’s 2006-vintage fund from Ontario Teachers’ Pension Plan, as Secondaries Investor reported.

Varma, which was established in 1998, had 7 percent of its assets invested in private equity as of 31 March, according to its latest interim report.

HarbourVest and Varma declined to comment. MML did not return a request for comment.