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HarbourVest’s Absolute Acquisition (Not The Vodka)

The board of Absolute Private Equity, a Zurich-based, publicly listed fund-of-funds firm, recommended to shareholders that they sell the firm to HarbourVest Partners for $752 million in cash, or $17.25 a share. The deal is subject to majority shareholder approval.

Absolute’s funds invest in a range of private equity and venture investments, including stakes in distressed securities, mezzanine debt and secondary fund investments. As of last week, the net asset value per share was $24.16, according to a press release.

Boston-based HarbourVest, with more than $30 billion under management, is one of the world’s largest fund-of-funds firms. It plans to finance the proposed acquisition through a combination of its $2.9 billion Dover Street VII LP secondary fund and its closed-end investment company, the Amsterdam-based HarbourVest Global Private Equity Ltd.

“This transaction offers shareholders an opportunity to exit their investment for cash at an attractive price, whilst it enables others to remain invested alongside an experienced partner,” said Thomas Amstutz, Absolute’s chairman, in a written statement. He called HarbourVest an “ideal partner for Absolute Private Equity.”

HarbourVest has been particularly active on the acquisition front of late, bidding aggressively for the private equity assets of major banks ahead of the implementation of the Volcker Rule, which is part of the new Dodd-Frank financial reform law.

The Volcker Rule, named after former Fed Chairman Paul Volcker, severely curtails the amount of alternative investments that banking firms can manage, which in turn has led these banks to try and exit these businesses.

In mid-April, HarbourVest was among a syndicate of private equity firms that created a new fund-of-funds company, NewQuest Capital Partners, that simultaneously acquired all the non-real estate related Asian private equity assets of Bank of America Merrill Lynch.

If the deal for Absolute Private Equity is approved by shareholders, as expected, the acquisition will likely close in the third quarter.