HarbourVest eyes August close for multi-billion secondaries fund

Dover Street XI is already 46% larger than its predecessor, which closed on $8.1bn in 2020.

HarbourVest Partners, the seventh-biggest firm in secondaries according to the SI 50, is within a hair’s breadth of the target of its latest flagship fund.

The Boston-headquartered manager has raised $11.86 billion for Dover Street XI, according to documents prepared by consultant NEPC for US pension MWRA Employees’ Retirement System’s 30 May board meeting.

The fund is expected to hold its final close in August this year, the documents show.

The MWRA document requested information from secondaries firms by 10 May and the amount raised for Dover XI so far is listed as “to date”.

Dover XI has a $12 billion target, according to Secondaries Investor data. The fund launched in 2021 and reached its third close last August with $5.05 billion. It has received commitments from the Arkansas Public Employees Retirement System, Connecticut Retirement Plans and Trust Funds, New Hampshire Retirement System and other LPs.

Dover XI will target a 20 percent net internal rate of return and aims to deliver a return multiple of 1.7x, according to the pension documents.

HarbourVest charges an annual management fee based on LP’s capital commitment to the fund. It starts at 25 basis points for the first year and gradually increases to 125 basis points during years four to seven, according to the documents. Management fees will drop to 10 basis points after the 10th anniversary of the fund’s commencement date.

Dover XI charges a performance fee of 12.5 percent over an 8 percent return, the documents show.

The predecessor fund, Dover Street X, closed on $8.1 billion against a $5.75 billion target in 2020 with commitments from the State of Michigan Retirement Systems, Employees Retirement System of Texas, Vermont Pension Investment Commission and others, according to Secondaries Investor data.

Edward Holdsworth, a managing director at HarbourVest, told affiliate title Private Equity International in May that the firm is able to buy high-quality assets at wider discounts in today’s environment.

“This is a strategy that prospers in times of volatility, dislocation and distress,” Holdsworth said.

The secondaries market hit a new fundraising record amid continued market dislocation last year: a total of $117.92 billion was raised across all asset classes in 2023, more than double the previous year’s $53.28 billion, according to Secondaries Investor data.

A spokesperson for HarbourVest declined to comment.