Secondary brokers may be wary of HarbourVest Partners after the firm backed out of a signed deal, but investors aren’t
HarbourVest Partners has surpassed its fund-raising target on Dover Street VII, a vehicle designed to invest in limited partner stakes of private equity funds, according to sources familiar with the effort.
HarbourVest began raising the fund in May with a $2 billion target. The firm has secured commitments greater than $2 billion, but has not set a final closing date for the fund.
Dover Street VI, the firm’s most recent secondary fund, was raised in 2005 and had a target of $750 million in commitments. The actual amount raised is unclear.
As previously reported, HarbourVest has backed out of a signed agreement to acquire a large limited partner stake on the secondary market. According to multiple sources, the firm is using a material adverse change (MAC) clause as one of its causes of action, having originally agreed to the transaction prior to the past month’s market volatility.
The sources said the economic crisis has created deep discounts in the secondary market, and that HarbourVest Partners was no longer willing to pay the pre-crisis price it had agreed to. The deal was all but done, waiting on only general partner approval to close, when HarbourVest pulled the plug. The firm declined to comment.
The move may turn off sellers, but it does not indicate the firm is on the sidelines. HarbourVest continues to actively seek secondary buys for its Dover funds and also its main funds of funds, HarbourVest Partners VIII, which closed in 2006 with $3.5 billion in commitments.