Global private equity firm HarbourVest Partners has closed its fourth fund at $2.8 billion. HarbourVest International Private Equity Partners IV will comprise two separate partnerships and will be invested predominantly in Europe. Around $374 million has been allocated to direct investments, while $2.326 billion is reserved for the fund-of-funds and secondaries business.
The firm has a conscious strategy of seeking out investment opportunities in three distinct areas: new partnerships, secondary interests in partnerships, and direct investments in operating companies. While each of these areas of opportunity stands on its own, all three overlap and provide incremental value to the investment decision-making process of the firm.
George Anson, managing director, envisages around 90 per cent of the fund will be committed to ventures in Europe. He also stresses that the fund-of-funds business and direct investment business are two distinct and separate packages. “We don’t let one drive the investment process of the other.”
Fund raising began in early 2001 and Anson admits it hasn’t been plain sailing: “Fund raising is never easy and the events of September 11 took three or four months out of our schedule, but we are pleased to have closed.” He anticipates the fund taking four to five years to commit. The fund has attracted over 100 LPs, an equal split of US and European investors.
Anson is upbeat about investment opportunities. He says that while the overall market for M&A activity has declined, the percentage of transactions with private equity backing has increased. “Whenever there’s economic uncertainty or change, private equity benefits,” he says.
As far as an overhang of funds for investment is concerned he asks: “Is there too much money in the buyout marketplace? Not necessarily.” It is one of the few sectors where there are some very attractive opportunities and he even foresees more demand for mega buyout funds being raised in the future. With many businesses up for sale this year, there have been private equity groups in the running, says Anson. Prime examples are Vivendi’s planned disposal of its assets; Legrand and Jefferson Smurfit. Most recently Candover and Cinven reached an agreement to buy Kluwer Academic Publishers (KUW), the academic publishing arm of Dutch publishing giant Wolters Kluwer, for EURO600 million. The two private equity houses beat off interest from UK academic publisher Taylor & Francis and US academic book house John Wiley, while other LBO shops including Apax Partners, and Paribas Affaires Industrielles expressed early interest in the company but did not submit bids.
HarbourVest Partners is a limited liability company that was formed in January 1997 by the former management of Hancock Venture Partners, Inc. (“Hancock Venture Partners”) to assume the business of Hancock Venture Partners. Hancock Venture Partners was founded in 1982 by the two senior managing directors of HarbourVest to provide institutional investors with a vehicle through which to invest in venture capital and other private equity partnerships as well as directly into operating companies.
HarbourVest is 100 per cent owned by its 12 managing directors and invests in all types of private equity funds, including venture capital and leveraged buyout funds, and also directly in operating companies. HarbourVest currently manages investments in North America, South America, Europe, Asia, Australia and Africa.