HarbourVest seeks buyers for Conversus portfolio – exclusive

HarbourVest Partners is attempting to sell a portfolio of private equity fund stakes it acquired through the purchase of listed vehicle Conversus Capital, Secondaries Investor has learned.

The Boston-headquartered investment manager has not hired an intermediary for the process, according to two sources familiar with the matter. One of the sources said the portfolio has a net asset value of around $800 million and that potential buyers have already submitted bids.

HarbourVest declined to comment.

In 2012 the firm used funds from its 2011-vintage Dover Street VIII fund as well as its London-listed fund of funds HarbourVest Global Private Equity (HVPE) to acquire Amsterdam-listed Conversus’s portfolio for $1.4 billion in a take-private deal.

At the time, Conversus was the largest publicly-traded private equity portfolio of third-party funds in the world and held more than 200 fund interests and direct co-investments. Prior to agreeing in July 2012 to the deal with HarbourVest, the company had experienced several years of struggling through market volatility which caused it, and many other listed private equity vehicles, to trade at a wide discount to its underlying NAV.

Ultimately, the firm was not able to overcome “the persistent trading discount of its units to NAV that wasn’t in the best interests of unitholders”, a Conversus spokesperson told sister publication Private Equity International at the time.

Dover VIII, which closed on $3.6 billion, was HarbourVest’s second-best performing secondaries fund by net internal rate of return as of 31 March 2016, delivering a 30.5 percent net internal rate of return and 1.4x total-value-to-paid-in multiple, as Secondaries Investor previously reported.

The Conversus transaction has also performed well for HVPE, which has noted in various monthly updates that the deal has been a large source of realisations.

Secondaries firms have been increasingly offloading second-hand stakes, the most recent high-profile example being Ardian‘s sale of a $1 billion portfolio of stakes held in its 2016-vintage AXA Secondary Fund IV. In March Canada Pension Plan Investment Board emerged as the buyer of that portfolio, as Secondaries Investor reported.