HarbourVest funding belief agrees shake-up after activist’s complaints | USAEMALL.com

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A FTSE 250 private equity investment trust introduced new initiatives on Thursday to help close the share price’s wide 35 per cent discount to the trust’s net asset value (NAV) per share at the end of 2024, sending its shares up as much as 6 per cent on the day.

Metage, a London-based activist investor, wrote to shareholders of HarbourVest Global Private Equity Limited (HVPE) in November, asking that the company revamp its strategy. Metage complained that since summer 2020, HVPE’s share price had trailed well behind the underlying value of the fund. The activist suggested that HVPE needed to accelerate share buybacks and reconsider how to invest the fund’s spare cash.

After consulting with shareholders, the board of HVPE proposed three changes aimed at maximising shareholder return and dealing with the large discount to NAV. These initiatives will be presented to shareholders on February 4.

First, HVPE has agreed to double the proportion of its available cash in its distribution pool for share buybacks from 15 to 30 per cent. Next, a new simplified investment structure has been agreed in principle with investment manager HarbourVest Partners. This will segregate the trust’s investment funds into a separate vehicle to create a more direct link between HVPE investors and the private equity holdings. Previously, investments were commingled with those of other HarbourVest Partner’s clients.

Finally, the board proposed the introduction of a continuation vote at the 2026 annual general meeting. According to the trust, “HVPE will be the first listed PE fund of funds investment company to take this step. Shareholders will be asked by simple majority vote if they wish the company to continue.” Shareholders had not asked for this vote.

“HVPE’s discount to NAV remains a key focus,” said its chair Ed Warner, a former investment banker. “We understand and share our shareholders’ concerns, and believe the three measures announced today will maximise returns, help to address the discount, improve flexibility and give shareholders greater control over their investment.”

There are some doubts among investors and analysts, however. “Undoubtedly the devil will be in the detail re the [new segregated structure]. For me the key issue by far is the buyback commitment,” said Alan Brierley, an analyst at Investec. Nevertheless, he sees these initiatives as positive overall.

This move follows the recent push by US activist Saba Capital, run by Boaz Weinstein, to overturn the entire boards at seven UK-listed investment trusts. This month Saba lost its first of these shareholder votes at Herald Investment Trust. The other votes will follow in February.

Metage declined to comment.