HarbourVest Global Private Equity Limited Annual Results for the - - PowerPoint PPT Presentation
27 May 2010 HarbourVest Global Private Equity Limited Annual Results for the Year Ended 31 January 2010 Contents 1. Financial Highlights 2. Portfolio Composition 3. Commitments and Balance Sheet 4. Subsequent Event: Overview of Liquidity
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1. Financial Highlights 2. Portfolio Composition 3. Commitments and Balance Sheet 4. Subsequent Event: Overview of Liquidity Plan 5. Manager’s Outlook Appendix:
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13% $47.3 $352.3 $399.6 Cash & Available Credit Facility 12% 52% 64% Commitment Coverage Ratio 1/09 – 1/10 Change 31 Jan 31 Jan (18%) 214% 196% Commitment Level Ratio 3% 106% 109% % Invested 4% $55.8 $1,350.6 $1,406.4 Total PE Exposure 17% $115.3 $668.1 $783.4 NAV of Investments (9%) ($59.5) $682.5 $623.0 Commitments 14% $1.04 $7.61 $8.65 NAV per Share 14% $86.9 $631.3 $718.2 NAV % $ 2009 2010 May 2009 Oriel Securities appointed corporate broker December 2009 Lock-up expired on all remaining shares held by “rolling” shareholders April 2010 JP Morgan Cazenove appointed joint corporate broker April 2010 Announcement of Liquidity Plan May 2010 Listing on Specialist Fund Market of LSE and Secondary Placing May 2010 £10 million investment in HarbourVest Senior Loans Europe Limited
Financial Performance Key Events Since 31 January 2009
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$8.65 $7.61 ($0.27 ) $0.17 $0.00 $0.33 $0.37 $0.44 $7.00 $7.50 $8.00 $8.50 $9.00 NAV at 31- January-09 HarbourVest U.S. Funds HarbourVest International Funds HarbourVest Direct Funds HarbourVest Secondary Fund Unrealised Foreign Currency Gains Operating Expenses NAV at 31- January-10
NAV per Share ($)
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HarbourVest-managed funds (1)
fund interests across multiple high-quality managers (1)
company investments (directly or indirectly) (1)
approximately 63% primary, 20% secondary and 17% direct investments at 31 January 2010
________________
commitments to HarbourVest funds that have not yet been committed to underlying partnerships.
Private Equity Exposure(3) $175 million Unfunded Commitments (Not Allocated to Underlying Partnerships)(2) $448 million Unfunded Commitments (Allocated to Underlying Partnerships) $623 MILLION TOTAL UNFUNDED COMMITMENTS $783 MILLION NAV OF INVESTMENTS
$1,406 million Total Private Equity Exposure
Private Equity Exposure(3)
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access to a broad cross-section of private equity investments
large buyouts
vintage year and industry
recent vintages
Vintage Industry Strategy Geography
2000 9% 2001 11% 2004 9% 2006 13% 1993 - 1998 5% 2007 13% 2008 7% 1999 6% 2005 11% 2002 5% 2003 10% 2009 1% U.S. 64% Europe 28% Asia- Pacific 4% ROW 4%
________________ The diversification analysis is based on the fair value of the underlying investments. Strategy, vintage, and geography diversification are based on the net asset value of partnership investments within HVPE’s fund-of-funds and company investments within HVPE’s direct funds. Industry diversification is based on the reported value of the underlying company investments. Some of the funds held in HVPE have not been fully invested. The composition of investments by strategy, vintage, industry, and geography may change as additional investments are made and existing investments are realised. Large buyout includes funds of more than $7 billion in size, medium buyout includes those between $1 billion and $7 billion in size, and small buyout includes those less than $1 billion in size. Direct investments in operating companies are categorised by deal size.
Consumer 18% Tech 22%
Balanced Venture 12% Medium Buyouts 30% Small Buyouts 19% Large Buyouts 10% Other 3% Early Stage Venture 14% Venture / Growth Equity 12% Business Services 5% Other 6% Products 12% Software 11% Services 4% Other 7% Cleantech 3% Other 5% Financial 7% Industrial 9% Media / Telecom 13% Medical / Biotech 18%
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represent 67% of companies but only 38%
represent 28% of companies and 59% of NAV
investment is in medium buyouts
________________ Company data is based on the classification of the partnership that holds the company investment. Where company investments are held across multiple partnerships with different classifications, the company has been classified as the strategy of the largest position. NAV data is based on partnership classification.
Large Buyouts 9% Large Buyouts 10% Medium Buyouts 10% Medium Buyouts 30% Small Buyouts 9% Small Buyouts 19% Venture / Growth Equity 10% Venture / Growth Equity 12% Balanced Venture 25% Balanced Venture 12% Early Stage Venture 32% Early Stage Venture 14% Other, 5% Other, 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of Companies % of NAV
5,529 Companies $783.4 Million NAV of Investments
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18% 7% 13% 26% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
HVPE Total Venture Total Buyout Total Other
Portfolio Strategy Venture and Buyout Strategy
________________ Based on NAV of Investments, adjusted for cash flows; Data includes primary, secondary and direct investments See diversification note on slide 8
Performance by Strategy 31 January 2009 – 31 January 2010
38% 59% 3% % of NAV
Year Ended 31/01/2009 Strategy Performance 15% 0% 41% 15% 31% 7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Early Venture Balanced Venture Growth Equity Small Buyout Medium Buyout Large Buyout
14% 12% 12% 19% 30% 10%
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________________ As reported in HVPE’s Annual Report for the year ended 31 January 2010; Numbers at end of bar represent total % of NAV represented by the relevant Vintage Year or Year of Investment See diversification note on slide 8 (1) Vintage Year represents year of first draw for primary and direct funds, and year of purchase for secondary investments (2) Year of Investment represents year of investment for all underlying companies
Vintage Year Diversification(1) Year of Investment Diversification(2)
4% 13% 13% 15% 18% 13% 7% 5% 4% 4% 2% 2% 0% 5% 10% 15% 20% 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1987 - 1998
Buyout / Other Venture
to 1993
back to 1987
2005 – 2007 Year of Investment represent 29% of NAV – Large buyouts from this period represent 9% of NAV
1% 7% 13% 13% 11% 9% 10% 5% 11% 9% 6% 5% 0% 5% 10% 15% 20% 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1993 - 1998
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________________ Companies in bold are held at least in part in HarbourVest direct funds * Shenzhen Development Bank partially sold in May 2010 † Brenntag Group completed an IPO in March 2010, and Amadeus Global Travel Distribution completed an IPO in April 2010 ‡ Company not included in top 25 at 31 July 2009 § Invitel Holdings A/S de-listed in February 2010
investments represent 20.6% of NAV
investments represent 8.9% of NAV
than 3.2% of NAV and
greater than 1%
represent 16 of the top 25 holdings
through 26 May 2010, 6
have had liquidity events
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$26.6 $10.8 $15.3 $8.5 $18.6 $7.4 $13.3 $25.1 $15.3 $19.3 $0 $5 $10 $15 $20 $25 $30 $35 Q109 Calls Q109 Dist Q209 Calls Q209 Dist Q309 Calls Q309 Dist Q409 Calls Q409 Dist Q110 Calls Q110 Dist
$4.0 0.0 (0.2) 4.9 ($0.7) Net Cash Flow 3 Mo Ended 30 Apr 10 Year Ended 31 Jan 10 Year Ended 31 Jan 09 ($22.0) (3.3) (7.5) 0.7 ($11.9) Net Cash Flow ($45.1) (17.0) Secondary Funds (12.0) Direct Funds 29.2 International Fund-of-Funds ($45.3) U.S. Fund-of-Funds Net Cash Flow $ in millions
Net Cash Flow = $4.0 Net Cash Flow = ($15.8)
Feb – Apr May – July Aug – Oct
Net Cash Flow = ($6.8)
Nov ’09 – Jan ‘10
Net Cash Flow = ($11.2)
Feb – Apr
Net Cash Flow = $11.8
$ Millions
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88 79 46 55 49
20 40 60 80 100 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% IPO - Buyout/Mezz M&A - Buyout/Mezz IPO - Venture M&A - Venture % of NAV *
________________ * Percentage of NAV represents the estimated value of the investments experiencing the liquidity events as a percentage of the quarter ending NAV of Investments
# of Transactions % of NAV
Feb – Apr May – July Aug – Oct Nov ’09 – Jan ‘10 Feb – Apr
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commitments of $623 million, 72% ($448 million) have been allocated to underlying partnerships and 28% ($175 million) are not allocated
million represent 190% of commitments
$400 million
89% of allocated commitments and 64% of total commitments
Available Credit Facility (ACF) $389 NAV of Investments $783 Allocated Commitments $448 Commitments Not Allocated $175
$623
Cash $11
$1,183 $0 $200 $400 $600 $800 $1,000 $1,200 HVPE Resources Unfunded Commitments
LIQUID RESOURCES Liquid resources equal 89% of Allocated Commitments and 64% of Total Commitments
$ Millions
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Limited (“HSLE”) – 9.9% ownership position
Europe – Secondary and primary investment strategy – Leverages HarbourVest’s private equity relationships and expertise
– HSLE is listed on the Main Market of the LSE – Targeting to begin returning cash starting year ended 30 June 2012 – Continuation vote at the AGM after seventh anniversary
– Cash yield with opportunity for capital appreciation – Secure asset class – Inflation hedge
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________________ Source: Trading data shown through 21 May 2010.
Per Share Volume (000s)
580
2.5 0.5 2.0 0.5 19.5 0.3 0.0 15.0 2.8 0.1 0.6 282.7 1.0 0.22.6 0.1 5.1 2.5 15.9 2.0 0.7 150 150 580 15.5
$2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50 $10.00 $10.50 $11.00 30 Nov 2007 30 Dec 2007 30 Jan 2008 29 Feb 2008 30 Mar 2008 30 Apr 2008 30 May 2008 30 Jun 2008 30 Jul 2008 30 Aug 2008 30 Sep 2008 30 Oct 2008 30 Nov 2008 30 Dec 2008 30 Jan 2009 28 Feb 2009 30 Mar 2009 30 Apr 2009 30 May 2009 30 Jun 2009 30 Jul 2009 30 Aug 2009 30 Sep 2009 30 Oct 2009 30 Nov 2009 30 Dec 2009 30 Jan 2010 28 Feb 2010 30 Mar 2010 30 Apr 2010 25 50 75 100 125 150 175 Volume Closing Price per Share Estimated NAV per Share
$8.64 36% Discount
Most recent trade 19 May at $5.50
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– Dual listing in London and Amsterdam – Completed 12 May
– 4.8 million shares (5.8% of outstanding) placed on 18 May at $5.75 per share – Pricing represents a 15% premium to last trade of $5.00 and a 33% discount to NAV – Shares placed with eight new shareholders and one smaller existing shareholder
– Purchasers of shares in Secondary Placing and thereafter in market granted Put Rights to sell shares back to the Company
October 2011 – $40 million allocated by Company to repurchase shares arising from Put Offer
shares in the market – Put Rights likely to be accretive to NAV per share if exercised
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– Ongoing economic recovery – Recovery of public markets – Currency stability
– Distributions poised to accelerate when IPO window reopens
– Venture exposure
– Expect to use a portion of HVPE’s credit facility to bridge any near-term net cash outflows – Flexibility to fund $40 million Put Right obligation, if necessary
– HVPE will continue to invest as underlying HarbourVest Funds allocate committed capital – Company will consider additional commitments to newly forming HarbourVest Funds
markets and HVPE
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– Guernsey-incorporated closed-end investment company
– U.S. dollar
– Specialist Fund Market of the LSE – Euronext Amsterdam by NYSE Euronext
– Ticker – HVPE – Bloomberg – HVPE NA – ISIN – GG00B28XHD63
– HarbourVest Advisers L.P., an affiliate of HarbourVest Partners, LLC
– Netherlands Authority for the Financial Markets
– Guernsey Financial Services Commission
– J.P. Morgan Cazenove(1) 10 Aldermanbury, London EC2V 7RF Tel: +44 (0) 20 7588 2828 – Oriel Securities Limited 125 Wood Street, London EC2V 7AN Tel: +44 (0) 20 7710 7600
– Monthly NAV – generally within 15 days of month end – Interim Management Statement – June 2010 and November 2010 – Semi-annual reporting – September 2010 – Informal Meeting for Shareholders – 23 June 2010 at 2:00pm (UK)
– The Investment Manager does not charge HVPE management fees or performance fees, except with respect to parallel investments – As an investor in HarbourVest funds, HVPE is charged the same management fees and is subject to the same performance allocations as other investors in HarbourVest funds
– www.hvgpe.com
– Steve Belgrad Chief Financial Officer Tel: +1 617 348 3653 sbelgrad@harbourvest.com – Amanda McCrystal Head of IR and Communications Tel: +44 (0) 20 7399 9830 amccrystal@harbourvest.com
________________ (1) J.P. Morgan Securities Ltd., which conducts its U.K. investment banking activities as J.P. Morgan Cazenove
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The portfolio listing illustrates HVPE’s diversity and shows the major attributes of the 20 HarbourVest funds in which HVPE is invested
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________________ * Jean-Bernard Schmidt, an Independent Director of HVPE, is Managing Partner of Sofinnova Partners. † Manager not included in largest managers at 31 July 2009.
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________________ * Jean-Bernard Schmidt, an Independent Director of HVPE, is Managing Partner of Sofinnova Partners. † Manager not included in largest managers at 31 July 2009.
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________________ * Company not included in top 25 public companies at 31 July 2009 † Shenzhen Development Bank partially sold in May 2010 ‡ Invitel Holdings A/S de-listed in February 2010
investments represented 7.3% of investment value
investments represented 4.1% of investment value
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__________________ (1) Where relevant benchmarks exist. See next page and additional notes in Appendix.
Largest Private Equity Fund-of-Funds Manager with Experienced, Global Team
together with a support staff of more than 150 Consistent Private Equity Strategy
partnerships, secondary investments, direct investments
funds, secondary-focused funds, direct / co-investment funds Demonstrated Upper Quartile Investment Performance
strategies1
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– Rigorous approach to fund manager selection and asset allocation across strategies – Experienced management team across many cycles – Access to leading sponsors
16.0%
10.3%
0% 5% 10% 15% 20% MSCI Median Upper Quartile HarbourVest Portfolio
U.S. PARTNERSHIP INVESTMENT PERFORMANCE AS OF SEPTEMBER 30, 2009 (VINTAGE YEARS 1989-2005) EUROPEAN PARTNERSHIP INVESTMENT PERFORMANCE AS OF JUNE 30, 2009 (VINTAGE YEARS 1990-2005) 4.2% 15.5% 7.0% 15.9% 0% 5% 10% 15% 20% Russell 2000 Median Upper Quartile HarbourVest Portfolio
Public Equity Benchmarks 1 Total Return Private Equity Benchmarks 2 Private Equity Benchmarks 5 Public Equity Benchmarks 4 Total Return
6
IRR IRR
________________ Note: Comparison of public equity returns with private equity returns may not be meaningful
________________ Note (*): Minimum performance of funds in upper quartile. Notes 1-6: See Track Record Disclosure in Appendix. U.S. figures are calculated in U.S. dollars, Europe figures are calculated in euros. These returns represent HarbourVest’s experience in selecting top-tier private equity managers over the long term. An investor’s return in a specific fund would have been different and would have been reduced by the management fees, expenses, and performance allocations of the HarbourVest funds. For example, the difference between the net internal rate of return to Limited Partners (net L.P. IRR) and the gross IRR for HarbourVest Partners VI-Partnership Fund L.P. is 2.9%; for HarbourVest Partners VI-Buyout Partnership Fund L.P. is 3.3%; and for HarbourVest International Private Equity Partners III-Partnership Fund L.P. is 2.8%.
3
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STRICTLY CONFIDENTIAL This document and this presentation have been prepared and issued by HarbourVest Global Private Equity Limited (the “Company”) for information purposes only and may not be used in making any investment decision. None of the Company, its investment manager, HarbourVest Advisers, L.P. (the “Investment Manager”) or HarbourVest Partners, LLC (“HarbourVest”) has independently verified the information contained in this document and this presentation. This document and this presentation contain only summary information and no representation or warranty, express or implied, is or will be made in relation to the accuracy or completeness of the information contained herein and no responsibility, obligation or liability (whether direct or indirect, in contract, tort or otherwise) is or will be accepted by the Company, HarbourVest, the Investment Manager or any of their respective affiliates or by any of their respective officers, employees or agents in relation to it. Each of the Company, HarbourVest, the Investment Manager and their respective affiliates and officers, employees or agents expressly disclaims any and all liability which may be based on the document and any errors therein or omissions therefrom. In particular, no representation or warranty is given as to the achievement or reasonableness of future projections, management targets, estimates, prospects or returns, if any. Any views contained herein are based on financial, economic, market and other conditions prevailing as of the date of this document and this presentation. The information contained in this document and this presentation will not be updated. Further information on the Company, its Investment Manager and HarbourVest can be found in the prospectus published on 2 November 2007, in connection with the listing of the Company’s A ordinary shares on Euronext Amsterdam by NYSE Euronext (available at no cost from www.euronext.com), and on the Company’s website at www.hvgpe.com and HarbourVest’s website at www.harbourvest.com, including in announcements available on those sites. This document and this presentation do not constitute any form of financial opinion or recommendation on the part of the Company, HarbourVest or the Investment Manager
This document and this presentation contain track record data in relation to the performance of funds of funds managed by HarbourVest and its affiliates. When considering such track record data, investors should bear in mind that past performance is not necessarily indicative of future results and, as a result, the Company’s actual returns may be greater or less than the amounts shown herein. Investment returns will depend on the increase or decrease in the trading price of the Company’s shares. In addition the Company is a closed-end investment company and the performance data presented herein for HarbourVest, as well as the private equity index performance data, relates principally to funds structured as self-liquidating partnerships and in which investor contributions were made only when the underlying fund made an actual investment. Neither this document, nor this presentation, nor any copy of either may be taken or transmitted into the United States of America, its territories or possessions or distributed, directly or indirectly, in the United States of America, its territories or to any US person (as defined in Rule 902 of Regulation S under the US Securities Act of 1933 (the “Securities Act”)). The distribution of this document and this presentation in other jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. This document and this presentation are being distributed in the United Kingdom only to (a) persons who have professional experience in matters relating to investments who fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (b) high net worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(2) (a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Any investment or investment activity to which the presentation and these slides relate is available only to relevant persons and will be engaged in only with relevant persons. The Company has been registered with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten) as a collective investment institution which may offer participations in the Netherlands pursuant to article 2:66 of the Dutch Financial Markets Supervision Act. By participating in this presentation or by accepting any copy of this document, you agree to be bound by the foregoing limitations.
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This report contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events
‘‘believe,’’ ‘‘could,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘may,’’ ‘‘plan,’’ ‘‘potential,’’ ‘‘should,’’ ‘‘will,’’ and ‘‘would,’’ or the negative of those terms or other comparable terminology. The forward-looking statements are based on the Investment Manager’s beliefs, assumptions, and expectations of future performance and market developments, taking into account all information currently available. These beliefs, assumptions, and expectations can change as a result of many possible events or factors, not all of which are known or are within the Investment Manager’s control. If a change occurs, the Company’s business, financial condition, liquidity, and results of operations may vary materially from those expressed in forward-looking statements. Some of the factors that could cause actual results to vary from those expressed in forward-looking statements, include, but are not limited to: the factors described in this report; the rate at which HVPE deploys its capital in investments and achieves expected rates of return; HarbourVest’s ability to execute its investment strategy, including through the identification of a sufficient number of appropriate investments; the ability of third-party managers of funds in which the HarbourVest funds are invested and of funds in which the Company may invest through parallel investments to execute their own strategies and achieve intended returns; the continuation of the Investment Manager as manager of the Company’s investments, the continued affiliation with HarbourVest of its key investment professionals and the continued willingness
access or obtain new sources of financing at attractive rates in order to fund short term liquidity needs in accordance with the investment strategy and commitment policy; changes in the values of or returns on investments that the Company makes; changes in financial markets, interest rates or industry, general economic or political conditions; and the general volatility of the capital markets and the market price of HVPE’s shares. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events, and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future
forward-looking statements set forth in this document whether as a result of new information, future events, or otherwise, except as required by law or other applicable
all of its forward-looking statements by these cautionary factors. Please keep this cautionary note in mind while reading this report.
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Historical data includes both funds managed directly by HarbourVest and its affiliates and funds currently managed by HarbourVest as sub-manager to HVP Inc. (defined below). In addition, historical data includes periods when the funds were managed by the management team of HarbourVest when they were employees of HVP Inc. The HarbourVest team originated in the late 1970s when D. Brooks Zug and Edward W. Kane began making primary investments on behalf of John Hancock. In 1982, they founded Hancock Venture Partners, Inc. (“HVP Inc.”). On 29 January 1997, the management team of HVP Inc. formed a new management company known as HarbourVest Partners, LLC or
formation of HarbourVest, HVP Inc. engaged HarbourVest as sub-manager to carry out the terms of its management agreements with the funds formed when the management team was employed by HVP Inc. Other than a sub-management agreement, no relationship exists between HarbourVest and HVP Inc. The performance shown includes realised and unrealised investments. Unrealised investments are valued by the applicable manager in accordance with the valuation guidelines contained in the applicable partnership agreement. Actual realised returns on unrealised investments will depend on, among other factors, future operating results, the value of the assets, and market conditions at the time of disposition, any related transaction costs, and the timing and manner of sale, all of which may differ from the assumptions on which the valuations used in prior performance data contained herein are based and therefore may differ materially from returns indicated herein. Note 1: Source: Bloomberg–Total Returns. The public equity benchmark does not reflect the reinvestment of dividends. The public equity benchmark return is based on the value of an original investment made on 1 January 1989. These returns do not reflect the cash flows used to calculate the HarbourVest Portfolio return. In addition, the securities comprising the public equity benchmarks have substantially different investment characteristics and risk characteristics than the investments held by the HarbourVest managed funds. Accordingly, a direct comparison may not be meaningful. Note 2: Source: Venture Economics VentureXpert Database. Benchmark Summary Report. U.S. Private Equity, vintage years 1989-2005. Venture Economics provides performance data which is typically used by private equity firms as a broad based benchmark of private equity performance. For these vintage years, the VentureXpert Database is comprised of 1,350 U.S. partnerships and the HarbourVest portfolio is comprised of 383 U.S. partnerships. Note 3: Performance of all U.S. partnership investments (primary and secondary) made by HarbourVest and/or by HVP Inc. through HarbourVest Partners III, IV, V, VI, VII, and VIII, their companion funds, and Dover Street II, III, IV, V, and VI in years 1989-2005. Represents the annual return (IRR) calculated using monthly cash flows from the funds managed by HarbourVest to and from the various funds in which the HarbourVest funds invested during the period specified, after all fees, expenses, and performance fees of all the fund investments but before the HarbourVest funds’ own fees, expenses, and performance fees. These returns do not represent the returns to investors or the aggregate returns of any specific fund. If performance for prior funds was included, the results would still be in the upper quartile. Vintage years 2006-2008 are not included because the funds are actively investing capital and it is too early to assess their performance. If vintage years 2006-2008 are included, the HarbourVest portfolio return is 13.9%, while the median private equity benchmark is 3.6% and the upper quartile is 14.4%. HarbourVest vintage classification is based on the year in which capital was first funded to each underlying fund (for primary fund investments) or the year of HarbourVest’s purchase (for secondary investments). Note 4: Source: Bloomberg – Total return, MSCI All European Countries (MSEUE18), in euro. The public equity benchmark does not reflect the reinvestment of dividends. The public equity benchmark return is based on the value of an original investment made on 1 January 1990. These returns do not reflect cash flows used to calculate the HarbourVest Portfolio
managed funds. Accordingly, a direct comparison may not be meaningful. Note 5: Source: Venture Economics VentureXpert Database, Benchmark Summary Report. All Private Equity – Europe, vintage years 1990-2005; in euro. Venture Economics provides performance data which is typically used by private equity firms as a broad based benchmark of private equity performance. For these vintage years, the VentureXpert Database is comprised of 1,011 European partnerships and the HarbourVest portfolio is comprised of 201 European partnerships.
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Note 6: Performance of all European partnership investments (primary and secondary) made by HarbourVest and/or by HVP Inc. through HarbourVest International Private Equity Partners I, II, III, IV, and V, their companion funds, Global Select, and Dover Street II, III, IV, V, and VI in years 1990-2005. Prior to 1990, HarbourVest did not offer any funds whose investment strategy was primarily focused on investments outside the U.S. Represents the annual return (IRR) calculated using monthly cash flows from the funds managed by HarbourVest to and from the various funds in which the HarbourVest funds invested during the period specified, after all fees, expenses, and performance fees of all the fund investments but before the HarbourVest funds’ own fees, expenses, and performance fees. These returns do not represent the returns to investors or the aggregate returns of any specific fund. For the purposes of comparing HarbourVest’s gross return on European partnership investments to private equity benchmarks on a like basis, IRRs for European investments were calculated by converting U.S. dollar denominated cash flows to euro at historic daily exchange rates. The euro-based IRR is a hypothetical return since certain of the partnership investments were denominated in currencies other than the euro. The IRR calculated based on U.S. dollar cash flows is 19.1%. Non-U.S. / non-European partnership investments are not included because no relevant private equity benchmarks exist. If all non-U.S. partnership investments were included, the HarbourVest portfolio return would be 15.7% in U.S. dollars. Vintage years 2006 - 2008 are not included because the funds are actively investing capital and it is too early to assess their performance. If vintage years 2006 -2008 are included, the HarbourVest Portfolio return is 14.4%, while the median private equity benchmark is 0.0% and the upper quartile is 9.4%. HarbourVest vintage classification is based on the year in which capital was first funded to each underlying fund (for primary fund investments) or the year of HarbourVest’s purchase (for secondary investments).