HarbourVest Partners, LLC is marketing its sixth fund-of-funds targeting U.S. investments. The launch is significant because it signals HarbourVest’s further movement away from committing to buyout partnerships and direct deals.
If it reaches its $2 billion target, HarbourVest Private Equity Partners VI, L.P. is planning to invest $500 million in larger buyout funds, $250 million in direct deals and $1.25 billion mainly in venture capital partnerships, but also in smaller buyout funds, a source close to the fund raising said.
Paring Down LBO Fund Commitments
The group’s 29% allocation to large buyout funds from its current fund-of-funds is less than the 33% it planned to invest from Fund V. But the more dramatic change is the increase in its venture capital and small buyout fund allocation to 60% from 40% in Fund V (which could spell a jump in dollar value to $1.25 billion from $500 million). HarbourVest’s allocation to direct investments, meanwhile, now will be 12.5% of the new fund-of-funds as opposed to 30% in the prior vehicle.
HarbourVest is setting a target for the fund-of-funds that is almost twice as large as the $1.25 billion it raised for Hancock Venture Partners V, L.P. in 1997 (BUYOUTS Sept. 15, 1997, p. 9). The firm spun out of Hancock Mutual Life Insurance Co. at the time it launched that fund in 1996 (BUYOUTS Dec. 9, 1996, p. 1).
The firm early this year stayed on its fund-raising schedule by wrapping the $2.1 billion HarbourVest International Private Equity Partners, III, L.P. HarbourVest raises capital from institutional investors like Colorado Public Employees Retirement Association, Louisiana State Employees’ Retirement System and Massachusetts Pensions Reserve Investment Trust8