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HarbourVest emerges as lead investor in $1.5bn DeVos family office deal

The deal is one of the largest on the market in the pandemic downturn, which has stopped most secondaries deal activity as buyers and sellers look for more clarity on private equity valuations.

Betsy DeVos, US Secretary of Education, speaking at the 2017 Conservative Political Action Conference in National Harbor, Maryland. Source: Gage Skidmore/Wikimedia Commons

By Chris Witkowsky and Adam Le

HarbourVest Partners is poised to invest into a large secondaries process involving an investment unit associated with the family office of the DeVos family, sources told Buyouts.

The deal is one of the largest on the market in the pandemic downturn, which has stopped most secondaries deal activity as buyers and sellers look for more clarity on private equity valuations.

The seller, called Ottawa Avenue Private Capital, had been shopping up to $1 billion of private equity stakes. Sources said the process could total up to $2 billion but would likely not get to that level.

However, it appears the deal is heading for the higher amount. HarbourVest is investing $1.5 billion into the deal, with $1 billion of that on a preferred equity basis, sources said.

It’s not clear how far along the deal is at this point. Evercore is working as secondaries advisor on the process. A spokesperson for HarbourVest declined to comment, while a spokesperson for RDV did not respond to a comment request.

The Ottawa Avenue portfolio is fairly concentrated in terms of number of funds, sources previously told Buyouts. Some of the big relationships in the portfolio include Vista Equity and AEA Investors, Buyouts reported.

The make-up of the portfolio was expected to make the process more attractive to buyers, even in the downturn environment, sources previously told Buyouts. The Ottawa Avenue portfolio contained managers of high quality that were not particularly downturn-impacted, sources said.

The market also is flush with capital, with about $110 billion of dry powder for secondaries, sources said. Shopping a portfolio now “will get attention,” one of the sources said, as opposed to later this year when pent-up demand from the downturn explodes into the market.

The Grand Rapids, Michigan, firm was formed in 2015. The Ottawa investment team had historically operated as a business unit within RDV Corp, which was formed in 1991, according to Ottawa Avenue’s Form ADV.

RDV reorganized its investment advisory services into Ottawa Avenue to allow the team to expand its investment mandate beyond RDV to external clients and raise funds, the document said.

Richard DeVos was co-founder of multilevel marketing giant Amway. Richard’s son, also Richard, is married to Betsy DeVos, nee Prince, who in 2017 became President Donald Trump’s education secretary.

Ottawa Avenue is a wholly owned, indirect subsidiary of Wakestream Holdings, which is owned by members of the Richard and Helen DeVos family, according to the firm’s Form ADV.

In a letter to ethics officials at the Department of Education early in 2017, Betsy DeVos expressed her intention to divest her interests in 102 entities to avoid conflicts of interest.

Those entities included numerous PE funds from managers like Lee Equity Partners, Vista Equity Partners, Rhone Partners, Partners Group and AEA Investors, according to the letter.