1. HarbourVest recently bought BAML Capital Access Funds, a fund-of-funds focused on emerging managers, and renamed it HarbourVest Horizon. What was the impetus for that deal?
Directionally, there is increasing interest in emerging managers and with [this] team as part of the HarbourVest platform, we expect this to be a growing part of the investment expertise that our clients utilize.
2. How did the deal come about?
We happened to find a team that’s been doing this for 10 years, focused on this end of the market and also a team that has incredible cultural consonance with our team and our organization. It made a lot of sense to bring them on board and have them continue to do all the things they’ve been doing for their clients. These guys could have been walking up and down our halls.
It’s a great fit in terms of their customer-centric approach, how they think about the market and how they interact with one another. We’ve looked at a bunch of acquisitions over the years and you don’t always find that.
3. How would you characterize the BAML Capital portfolio and the overall universe of emerging managers?
In today’s market, you have more labor mobility than you had a decade or two ago. It’s more tolerable nowadays for a junior partner or someone below that to either leave and go to another shop or in some cases, start their own investment organization.
BAML Capital Access Funds is finding managers who often have 10 to 15 years of experience at an established firm [who] got this entrepreneurial bug and decided to round up a couple of other partners and create their own firm. That’s compelling when you see people come together like that, particularly people who have a track record of at least a decade.
4. With nearly $40 billion under management, doesn’t HarbourVest have the resources to do this on its own?
Historically when we’ve grown the types of things we do for our clients, we’ve arranged them internally. We’ve brought new employees on board or we’ve opened a new office. We’re approached … a few times a year by smaller managers that are thinking about their future, but these things aren’t easy to do. We think we can be one of the groups that is in a position to expand the types of things we do — not just organically, but also by acquiring a business, if all these factors line up.
5. Looking ahead, what’s the pipeline look like in terms of emerging manager commitments?
We continue to see a lot of opportunities in the emerging manager universe. We look at approximately 300 emerging manager funds each year, and we expect that to remain steady or grow. With the combined platform of HarbourVest and HarbourVest Horizon, we expect to see additional opportunities.
The HarbourVest Horizon team is four managing directors — Craig Fowler, Matt HoganBruen, Edward J. Powers, and Sanjiv K. Shah; and vice presidents Matthew Autrey and Brook Critchfield. Day to day, the team will operate independently in terms of cultivating opportunities. Client services will be coordinated with our other teams.
Edited by Steve Gelsi
Photo of John Toomey courtesy of HarbourVest