HVPE to moderate secondaries investments

HarbourVest Partners' listed investment vehicle is around 5 percentage points above its target allocation for the strategy amid a rising valuations environment.

HarbourVest Partners‘ London-listed investment vehicle will tone down its secondaries investments amid rising valuations.

HarbourVest Global Private Equity (HVPE)’s exposure to the strategy stands at about 30 percent, which is above its 25 percent target, director Richard Hickman said at an event presenting the findings of a survey of 30 HarbourVest managing directors.

“We’ll still commit to secondaries but perhaps in a more moderated way,” Hickman said. “In terms of HVPE you’ll have consistent exposure but not an increase over the next few years.”

The firm is also focusing on niche UK managers amid uncertainty around sectors such as consumer spending and retail. HVPE has about 3.5 percent of its portfolio exposed to UK assets, according to managing director Peter Wilson.

“It doesn’t mean we’re moving away from the UK,” Wilson said. “There are a number of managers we think have skills around specific niches or specific internationalisation for existing UK companies, or they may be relatively small players in a market but have an opportunity to consolidate. That still will be attractive for us.”

HarbourVest will pay less attention to GPs who focus on areas such as consumer and retail-based businesses given increasing uncertainty around those sectors, Wilson added.

“You can’t ignore what we all are going through, but you adapt the strategies to identify those managers who are best able to cope with the environment.”

The Boston-headquartered firm, which opened its London office in 1990, outlined three global “megatrends” for the next decade. They were: technological leaps forward, demographic shifts and an increasing role played by China, especially in venture capital.

In Europe the survey also identified consolidation as an investment opportunity.

HarbourVest may make acquisitions to allow it to expand into other asset classes, Wilson said. Last year the firm had acquired BAML’s capital access funds team which focuses on emerging and diverse managers, which it renamed HarbourVest Horizon.

“You might well see us in terms of expansion of other parts of private equity or private markets businesses like in real assets and in private credit,” he said. “We’re intent on following our own strategy and building skills where necessary via acquisition; we’re not looking to be acquirers for the sake of acquiring.”