HarbourVest Partners has agreed to buy the private equity portfolio held by Conversus Capital for $1.4 billion, or $22.11 per Conversus unit as of April 30. The deal is expected to hold an initial close during Q4 with subsequent closings occurring throughout 2013. In February, Conversus announced a review of strategic alternatives, including a possible sale. Debevoise & Plimpton advised HarbourVest.
HarbourVest Partners, LLC (“HarbourVest”), a leading global private equity firm, announced today that HarbourVest-managed funds together with HarbourVest Global Private Equity Limited (“HVPE”), a closed-end investment company, have, through an acquisition vehicle, signed a definite agreement (“Purchase Agreement”) to acquire the entities that hold Conversus Capital, L.P.’s (“Conversus”) portfolio of private equity fund interests and direct co-investments for $1.4 billion (implied value of $22.11 per Conversus unit as of 30 April).
In conjunction with the purchase, up to 49.9% of eligible Conversus unit holders may remain invested in Conversus’ investment portfolio by receiving interests in HarbourVest’s acquisition vehicle, HarbourVest Structured Solutions II L.P. (“HarbourVest Structured Solutions”), a newly-formed Guernsey limited partnership managed by HarbourVest (“Roll-Over Option”).
Conversus Capital, L.P. (NYSE Euronext in Amsterdam: CCAP), like HVPE, is a listed private equity fund and is the largest publicly-traded portfolio of third party private equity funds globally, with a broadly diversified portfolio of over 200 private equity fund interests. In February 2012, Conversus announced a review of strategic alternatives, including a possible sale.
HarbourVest’s secondary team is a market leader in providing innovative solutions to existing holders of private equity assets. In 2011, HarbourVest completed one of the first take-privates of a publicly traded private equity vehicle, by acquiring Absolute Private Equity Ltd., a Swiss listed private equity fund, in a transaction valued at over $800 million. After conducting extensive discussions with Conversus and its financial advisor, J.P. Morgan Securities, HarbourVest was able to offer an attractive transaction structure which addressed the needs of a diverse group of unit holders and culminated in the signing of the Purchase Agreement.
“HarbourVest is a leading global private equity investment firm and is the ideal partner for Conversus given its extensive experience in managing large private equity portfolios,” said Paul Guilbert, Chairman of Conversus GP, Limited. “This transaction offers all unit holders an opportunity to sell for cash at an attractive price, while allowing others to remain invested in Conversus’ investment portfolio alongside an experienced partner.”
“HarbourVest’s secondary team is able to work creatively and cooperatively with sellers of private equity assets to find solutions that address their specific needs. Based on our culture of resolving complexity, as well as our deep understanding of the private equity and secondary markets, we are often able to develop customized solutions,” said John Toomey, Managing Director of HarbourVest Partners, LLC. “We are pleased to be working with the Board of Conversus to meet the needs of their company and their unit holders. This is an attractive opportunity for HarbourVest-managed funds and HVPE to acquire a significant stake in a portfolio of high-quality private equity assets.”
As part of the transaction, up to 100% of Conversus unit holders will have the opportunity to receive cash, while up to 49.9% of eligible Conversus unit holders may choose to remain invested in the Conversus portfolio by receiving units in HarbourVest Structured Solutions. Prior to the first closing under the Purchase Agreement, HarbourVest intends to work with Conversus to distribute a unit holder circular regarding the election alternatives which shall include further information on the Roll-Over Option and HarbourVest Structured Solutions. Given the expectation of multiple closings, the transaction is expected to hold an initial closing during the last four months of 2012, with subsequent closings extending into 2013.
HarbourVest has been advised by Debevoise & Plimpton LLP.
Additional Information Regarding HVPE’s Participation
HVPE will be investing directly in this secondary transaction, alongside HarbourVest funds, and its direct commitment to the deal is expected to be approximately 9%, depending on the final unit holder elections. HVPE intends to fund its commitment through the use of its existing $500 million credit facility.
Sir Michael Bunbury, chairman of HVPE, said: “HarbourVest Global Private Equity seeks to be opportunistic in its investment approach and draw on its relationship with the investment manager to participate in compelling transactions. The purchase of the Conversus portfolio demonstrates the unique investment opportunities available to our company. Given the quality, diversity, and maturity of the Conversus portfolio, the Board believes this is a positive and appropriate use of the company’s credit facility.”
HVPE also participated in the purchase of Absolute Private Equity Ltd., alongside HarbourVest-managed funds, last year. Its investment in the Absolute portfolio has increased 34% in value in the 8 months since purchase (as of 31 May 2012) and has begun returning cash.
HarbourVest Structured Solutions II L.P.’s investment in Conversus is being made on behalf of HarbourVest-managed funds together with HarbourVest Global Private Equity Limited (“HVPE”), a Guernsey-incorporated closed-end investment company which has a dual listing on both the London Stock Exchange and Euronext Amsterdam. HVPE is advised by HarbourVest Advisers L.P., an affiliate of HarbourVest Partners, LLC.
HarbourVest Partners, LLC is an independent global private equity firm that invests in venture capital, buyout, mezzanine debt, and other private debt through primary partnerships, secondary purchases, and direct co-investments. Since 1986, HarbourVest has been a leading buyer of private equity assets, acquiring $9 billion of assets in deals across stages, types, vintages, and geographies and working with many types of sellers, including financial institutions, corporations, pension plans, government entities, endowments, and family offices. This flexibility enables HarbourVest to offer sellers of private equity comprehensive liquidity solutions. In addition to purchasing private equity and debt assets on a secondary basis, the HarbourVest team has committed more than $22 billion to newly-formed funds, and invested $4 billion directly in operating companies. The firm’s clients consist of 300 institutional investors, including pension funds, endowments, foundations, and financial institutions throughout the U.S., Canada, Europe, Australia, Latin America, and Japan.
About HarbourVest Global Private Equity Limited
HarbourVest Global Private Equity Limited (“HVPE”) is a Guernsey-incorporated closed-end investment company which has a dual listing on both the London Stock Exchange and Euronext Amsterdam.
HVPE is registered as an investment institution with the Netherlands Authority for the Financial Markets. HVPE is designed to offer shareholders long-term capital appreciation by investing in a private equity portfolio diversified by geography, by stage of investment, by vintage year, and by industry. It invests in and alongside HarbourVest-managed funds which focus on primary partnership commitments, secondary investments, and direct investments in operating companies. HVPE is advised by HarbourVest Advisers L.P., an affiliate of HarbourVest Partners, LLC.
About Conversus Capital
Conversus is a publicly traded portfolio of third party private equity funds. Conversus provides immediate exposure to a diversified portfolio of private equity assets managed by best-in-class general partners. Conversus’ objective is to maximize long-term unit holder value by harvesting its existing portfolio and returning capital to unit holders.
This press release is not an offer to sell, or a solicitation of an offer to buy, securities in the United States or elsewhere. The securities of Conversus and HarbourVest Structured Solutions have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements thereunder.
HarbourVest Structured Solutions is not a registered investment company under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”), and the resale of securities of HarbourVest Structured Solutions in the United States or to U.S. persons other than to qualified purchasers as defined in the Investment Company Act is prohibited.
This announcement does not constitute a prospectus or an offer within the meaning of article 3 of the Prospectus Directive (Directive 2003/71/EC as amended by Directive 2010/73/EU). This announcement has not been submitted to nor approved by any regulatory body.
This press release is not an invitation nor is it intended to be an inducement to engage in investment activity for the purposes of the restrictions on financial promotion set out in Section 21 of the Financial Services and Markets Act 2000 of the United Kingdom (the “FSMA”). To the extent that this press release does constitute an inducement to engage in any investment activity, it is directed only at: (i) persons who are outside the United Kingdom, (ii) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) of the United Kingdom (the “Financial Promotion Order”); (iii) persons who fall within Articles 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc.”) and Article 43(2) of the Financial Promotion Order; and (iv) any other persons to whom this press release can lawfully be communicated without breaching the prohibition on financial promotion in Section 21 of FSMA or any other relevant legislation (all such persons together being referred to as “relevant persons”). This press release must not be acted on or relied upon by persons other than relevant persons. Any invitation or inducement to engage in any investment activity included within this press release is available only to relevant persons and will be engaged in only with relevant persons. Anyone other than a relevant person must not rely on this press release.
This announcement includes statements that are, or may be deemed to be, “forward looking statements”. These forward looking statements can be identified by the use of forward looking terminology, including the terms “believes”, “projects”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “goal”, “target”, “aim”, “may”, “will”, “would”, “could”, “should” or “continue” or, in each case, their negative or other variations or comparable terminology. These forward looking statements include all matters that are not historical facts and include statements regarding the intentions, beliefs or current expectations of HarbourVest or HVPE. By their nature, forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the ability of HarbourVest or HVPE to control or predict. Forward looking statements are not guarantees of future performance. More detailed information on the potential factors which could affect the financial results of HVPE is contained in HVPE’s public filings and reports.
HarbourVest Global Private Equity Limited is registered with the Netherlands Authority for the Financial Markets as a collective investment scheme which may offer participations in The Netherlands pursuant to article 2:66 of the Financial Markets Supervision Act (Wet op het financieel toezicht). All investments are subject to risk. Past performance is no guarantee of future returns. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results.
This announcement is issued by HVPE, which is registered with the Netherlands Authority for the Financial Markets and whose registered address is at Anson Place, Mill Court, La Charroterie, St Peter Port, Guernsey GY1 1EJ.