HarbourVest Global Private Equity (HVPE), a listed fund which gives investors access to private equity managers across the globe, could be in for some pre-Christmas celebrations, according to analysts.
At this point it will be included on 10-year performance tables. The move could prompt investors to pay closer attention to the fund, when it is available for direct comparison with peers. The fund is still perceived by many as a relative newcomer to the London Stock Exchange.
“Since inception [HVPE's] shares have outperformed global listed and unlisted equities, represented by the FTSE All-World and LPX 50 indices, by 11 per cent and 36 per cent respectively,” said an analyst at Edison.
“HVPE provides a highly diversified route into the unlisted sector, which is many times larger than the listed sector and difficult for most individual investors to access directly.”
Currently, the market value implied by HVPE's share price is less than the value of the fund's assets under management, which total more than $1.5bn. This means the fund is trading at a discount to net asset value (NAV) – but when it enters into direct comparison with its peers, it is confident this gap could shrink.
“We trade at a 15 per cent discount to NAV, and this has narrowed from 30 per cent in the last 12 months,” said the fund's manager Richard Hickman. If the fund could sustain trading at a premium for a couple of years, Hickman explained, it would be able to issue new shares to expand for the first time since inception.
HVPE made its stock market debut in Amsterdam, raising $830m on its float to invest in private equity. It ploughs its money straight into HarbourVest's institutional funds, which then commit money to different private equity strategies across the world.
With a current exposure to more than 7,000 companies, HVPE has almost doubled its assets under management organically over the last decade as its underlying investments have returned cash for the fund to reinvest.
“HVPE has delivered class-leading NAV total returns since inception and over five years, with above-average returns over three years,” said the Edison analyst.
Institutional investors with money currently in the fund include the State Teachers Retirement System of Ohio, insurance group Prudential and investment bank Old Mutual. Retail investors only account for around 2.5 per cent of HVPE's shareholders, but Hickman hopes this may increase as listed private equity becomes more mainstream.