HarbourVest To Have $2.5B For U.S. LBO Funds

HarbourVest Partners LLC plans to close on about $5 billion for its eighth, U.S.-focussed fund of funds some time in the second or third quarter, and about $2.5 billion of that will be earmarked for LBO funds, said a person familiar with the fund.

The firm broke down HarbourVest Partners Fund VIII LP into three “a la carte” selections for its limited partners: buyout, mezzanine/distressed and venture. Given the selections that investors made, expect the firm to have about $500 million for mezzanine/distressed debt funds, and another $2 billion for venture funds. The Boston-based fund of funds giant has so far lined up about $3.5 billion in total commitments, and the $2 billion venture slice is reportedly already teed up.

HarbourVest last formed a U.S. fund of funds in 2002, which closed with $4.4 billion in commitments, and before that, formed its $4.6 billion sixth fund in 1999. Many backers of HarbourVest actually thought the new fund should shrink from the previous sizes to ensure it would be used to back only the highest-quality general partners, said the person familiar with the fund. HarbourVest declined comment.

HarbourVest is expected to do its share of re-upping this year, but may also review the funds of spinout groups. Last year it backed Centerbridge Capital Partners I, started by former head of private equity for The Blackstone Group, Mark Gallogly, and former Angelo, Gordon & Co. Partner Jeffrey Aronson. HarbourVest is also in the midst of re-upping with The Jordan Co.’s The Resolute Fund II.

Other buyout funds HarbourVest has committed to in the past include Brockway Moran & Partners Fund III, GTCR Fund VIII and Garnett & Helfrich Capital‘s Venture Buyout Fund.

HarbourVest employs 63 investment professionals working in offices in Boston, London and Hong Kong. It is fresh off closing a pair of international funds. At year end it closed HarbourVest International Private Equity Partners V-Partnership Fund LP at €2.4 billion ($3.1 billion), a sum earmarked mostly for European funds. That fund is already half committed.

The firm also just closed HarbourVest International Private Equity Partners V-Asia Pacific and Rest of World Partnership Fund LP at $527.3 million. That fund is earmarked for partnerships in Latin America, Eastern Europe and South Africa, along with the Asia Pacific region.—M.C.