HarbourVest Partners, solidifying its place among the biggest guns of the secondary market, has reached its hard cap of $2.9 billion for Dover Street VII LP, a global secondary vehicle with an original fundraising target of $2 billion.
The firm, which launched the fund in May, plans to hold a final close in the first quarter of 2009 to allow potential limited partners who have expressed an interest to use their 2009 allocations to make commitments. The Boston-based funds-of-funds manager buys holdings in existing venture capital, buyout and other private equity funds in small to mid-market partnerships, as well as portfolios of operating companies, in the United States, Europe, Latin America, Asia and emerging private equity markets.
Along with the acquisition of LP commitments to existing private equity partnerships, HarbourVest also has an appetite for synthetic secondaries (purchases of portfolios of direct investments through a new special purpose entity or via a new fund manager); structured transactions (customized liquidity solutions); and linked transactions (purchases of limited partnership interests where the manager requires a commitment to their new fund offering along with the secondary purchase).
According to backer Montana Board of Investments documents, the firm charges a management fee of 0.50 percent of committed capital for the first year of the investment period, 1 percent in year two and 1.25 percent in succeeding years. The carried interest is 12.5 percent, with no preferred return. The general partner will commit 1 percent of total committed capital.
The Virginia Retirement System recently re-upped with $30 million to Dover Street VII. Other backers include the Foreign and Colonial Investment Trust ($75 million); the Pennsylvania State Employees’ Retirement System ($30 million); and the Health Care Foundation of Greater Kansas City ($4 million).
HarbourVest Partners, which closed the predecessor fund in 2005 at $625 million, has a team of 22 secondary investment professionals that focuses on secondary opportunities.The legal counsel to the fund is Debevoise & Plimpton LLP.