HarbourVest Global Private Equity (HVPE) H2 2023 earnings summary

Executive summary

• Achieved 4% NAV per share growth in 2023, outperforming the previous year despite challenging private equity markets and economic headwinds.

• Share price traded at a significant discount to NAV, with a 42% discount as of January 2024, due to market uncertainty, high interest rates, and sluggish growth.

• Share buybacks totaled $38.5m in the period, funded by a new Distribution Pool, with $78.7m repurchased since September 2022.

• The portfolio comprises over 1,000 private company exposures and a $3.9bn portfolio, offering global private market access.

• Share price total return reached +251% over the last 10 years, with a 13.4% compound annual NAV per share growth rate in USD.

Financial highlights

• Net gain on investments of $140m in the 12 months ended 31 January 2024, led by Buyout, Secondaries, and Europe.

• Negative cash flow of $283 million for the year, reflecting weak distributions and ongoing capital calls.

• $275 million drawn to fund capital calls, ending the year with a $140 million cash balance.

• New commitments scaled back to $295 million in response to negative cash flow and to preserve liquidity.

• Total expense ratio (TER) was 2.94% for the year, up from 1.79% the previous year.

Outlook and guidance

• Optimism for a shift to positive cash flow as M&A and IPO activity show signs of recovery, with a substantial backlog of IPO candidates.

• Anticipation of increased portfolio realizations and renewed investor interest with potential IPOs, including SHEIN.

• New commitments are being managed at lower levels to preserve balance sheet strength and liquidity.

• Marketing budget increased to 1.7x last year's spend to boost investor demand.

• Expectation of continued strong long-term returns as economic and interest rate cycles turn.