HarbourVest Global Private Equity Ltd
Capital Markets Presentation
8 JUNE 2017
CONFIDENTIAL Contents
> Chairman’s Introduction > Global Markets Review 2017 > Portfolio Construction > Long Term Performance > Financial Performance & Portfolio Highlights > Key Take-Aways > Appendix: Managers and Investments
CONFIDENTIAL 1 Chairman’s introduction
HVPE is a FTSE 250 investment company with a market capitalisation of £1 billion
> Launched in December 2007 > Invests in and alongside HarbourVest funds > Targets consistently strong NAV growth over the long term > Offers a ready-made global private markets programme
HVPE Net Asset Value Growth ($ millions except per share data) 1,600 $1,475 (▲10%) $1,337 (▲6%) 1,400 $1,266 (▲10%) $1,167 (▲15%) 1,200 $1,030 (▲9%) 1,000 800 600 $18.47 $16.75 NAV per Share $15.86 NAV per Share 400 $14.38 NAV per Share $12.46 NAV per Share 200 NAV per Share 0 2013 2014 2015 2016 2017
Reflects data as of 31 January of each year. Past performance is no guarantee of future returns
CONFIDENTIAL 2 GLOBAL MARKETS REVIEW
JUNE | 2017 Global Markets Review 2017
> Reflections on the current macro environment
> Global private equity perspective 2016 / 2017
> Private markets outlook
CONFIDENTIAL 4 Global Markets Review 2017
> Reflections on the current macro environment
> Global private equity perspective 2016 / 2017
> Private markets outlook
CONFIDENTIAL 5 Near-term global economic outlook remains benign
Real GDP Growth Forecasts Composite PMI, Year-on-Year Change
2016 2017F 2018F Mar 2015 Mar 2016 Mar 2017 6.0% 58
PMI score >50 indicates 56 positive output and 5.0% employment intentions
54 4.0%
52 3.0% 50
2.0% 48
1.0% 46
0.0% 44 US Eurozone UK Emerging Global Eurozone UK US Emerging Global Markets Markets
Source: Real GDP Growth Forecasts: IMF, as of April 2017; Composite PMI: Bloomberg, as of March 31, 2017
CONFIDENTIAL 6 Economic data continues to surprise on the upside
Citi Economic Surprise Index 60
50
40
30
20 Data ahead of expectationsof aheadData 10
0
-10
-20
Data below below Data expectations
-30 2014 2015 2016 2017
Citigroup Economic Surprise Index tracks how economic data are faring relative to expectations: the index rises when economic data exceed economists’ consensus estimates and falls when data come in below estimates Source: Bloomberg, as of April 25, 2017
CONFIDENTIAL 7 Equity valuations look ‘priced to perfection’
Equity Market Valuations – EV / FWD EBITDA
MSCI World S&P 500 MSCI Europe 10-Year Avg MXWO 10-Year Avg SPX 10-Year Avg MXEU 14.0x
13.0x
12.0x +30% 11.0x +21% 10.0x +17% 9.0x
8.0x
7.0x
6.0x
5.0x
4.0x
’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17
’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17
’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17
Source: Bloomberg, as of March 31, 2017
CONFIDENTIAL 8 Politics clouds the horizon
Getty Images
CONFIDENTIAL 9 Global Markets Review 2017
> Reflections on the current macro environment
> Global private equity perspective 2016 / 2017
> Private markets outlook
CONFIDENTIAL 10 Global private equity market summary 2016
> Liquidity flows moderated, but absolute levels still attractive
> LPs seek to maintain / increase private equity exposure
> Investment activity declined from 2015 peak, to levels consistent with post-GFC average
> Industry performance sustains the argument
CONFIDENTIAL 11 GPs have taken advantage of attractive exit conditions
Global Private Equity-Backed Exits by Region EV / FWD EBITDA of MSCI World Index
US Europe Asia EM MSCI World Index $600 14x
$450 12x
$345
$300 $290 10x
$150 8x $82 $67
$0 6x ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 Q1 ’16 Q1 ’17
Source: Bloomberg, Thomson Reuters, AVCJ, APER, EMPEA, supplemented by HarbourVest market insights
CONFIDENTIAL 12 Record liquidity to investors well in excess of capital calls
Portfolio Cash Flows
’05 - ’08 cycle ’09 - ’12 cycle ’13 - ’16 cycle $6.1 billion in distributions $6.7 billion in distributions $12.6 billion in distributions (0.7x capital called) (1.1x capital called) (2.5x capital called) 1,200 3.5x
3.0x 800 2.5x
400 2.0x
$ Millions $ 1.5x 0
1.0x -400 0.5x
-800 0.0x Q1 ’05 Q1 ’06 Q1 ’07 Q1 ’08 Q1 ’09 Q1 ’10 Q1 ’11 Q1 ’12 Q1 ’13 Q1 ’14 Q1 ’15 Q1 ’16 Q1 ’17 Distributions Capital Calls Distributions / Capital Calls
Reflects cash flows from primary investments made by HarbourVest-managed funds and accounts; see notes 2 and 3 Past performance is no guarantee of future returns
CONFIDENTIAL 13 LP liquidity has supported a $1 trillion fundraising cycle
Private Equity Funds Raised by Region
’05 - ’08 cycle ’09 - ’12 cycle ’13 - ’16 cycle $1.1 trillion raised $517 billion raised $1.0 trillion raised
400 40%
300 30%
200 20% $ Billions$
100 10% $67 $35
0 0% ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 Q1 ’16 Q1 ’17
US Buyout Europe Buyout US Venture Asia EM % Buyout Funds >$5B
Source: Thomson Reuters, Incisive Media, and HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting
CONFIDENTIAL 14 GPs have used exit markets to lock in returns
Portfolio IRR at Cycle End DPI at Cycle End
US Buyout Europe Buyout US Buyout Europe Buyout 35% 35% 0.33x
30% 28% 30% 25% 25% 22% 25% 20% 0.22x
15% 20% 11% 0.15x 10% 15% 0.12x 5% 0.11x 10% 0% 0.07x 5% -5% -4%
-10% -8% 0% ’05 - ’08 ’09 - ’12 ’13 - ’16 ’05 - ’08 ’09 - ’12 ’13 - ’16
Reflects gross performance of the primary and secondary investments made by HarbourVest-managed funds and accounts in each cycle (Vintages 2005-2008, 2009-2012, and 2013-2016), measured as of the end date of the cycle (December 21, 2008, 2012, or 2016), see note 2 Past performance is no guarantee of future returns
CONFIDENTIAL 15 Investments have increased only modestly post-GFC
Global Private Equity Investment Activity
’05 - ’08 cycle ’09 - ’12 cycle ’13 - ’16 cycle $2.2 trillion invested $1.1 trillion invested $1.7 trillion invested
1,000
800
600 $ Billions $ 400
200 $87 $78
0 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 Q1 ’16 Q1 ’17
US Buyout Europe Buyout US Venture Asia EM
Source: Thomson Reuters, MergerMarket, S&P LCD and HarbourVest analysis of Asia from AVCJ, APER, EMPEA, and GP reporting
CONFIDENTIAL 16 Cautious investing has left a healthy “unfunded buffer”
US Buyout Funded Level at Cycle End Europe Buyout Funded Level at Cycle End
80% 80% 76% 74%
70% 70% 66% 64% 62% 60% 57% 60%
49% 49% 50% 50% 45%
40% 40% 35% 33% 30% 28% 30%
20% 20% 18% 15% 13% 9% 10% 10%
0% 0% ’05 ’06 ’07 ’08 ’13 ’14 ’15 ’16 ’05 ’06 ’07 ’08 ’13 ’14 ’15 ’16 % Funded 47% 34% 48% 34% Reflects primary investments made by HarbourVest-managed funds and accounts in each vintage year of the cycle (2005-2008 and 2013-2016), measured as of the end date of the respective cycle (December 31, 2008 and December 31, 2016) Past performance is no guarantee of future returns
CONFIDENTIAL 17 Asset pricing continues to be elevated
US Buyout Entry EV / EBITDA International Buyout Entry EV / EBITDA
US US (HV Portfolio) Europe Europe (HV Portfolio) 11.0x 11.0x
10.0x 10.0x
9.0x 9.0x
8.0x 8.0x
7.0x 7.0x
6.0x 6.0x
5.0x 5.0x ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
Source: S&P LCD Leveraged Buyout Report Q4 2016 and HarbourVest internal data (median EV / EBITDA by year) As of December 31, 2016
CONFIDENTIAL 18 Private equity – Sustained outperformance
Private equity Pooled Returns by Global Asset Class Other alternatives Public markets 20-year Returns 10-year Returns
Private Equity 12.3% Private Equity 9.2%
Real Estate 6.0% Infrastructure 6.0%
Infrastructure 6.0% Real Estate 2.7% +6.0% +4.7% Hedge Funds N/A – no data Hedge Funds 3.2%
MSCI World 6.3% MSCI World 4.5%
5-year Returns 3-year Returns
Private Equity 12.7% Private Equity 9.8%
Real Estate 10.2% Real Estate 9.5%
Infrastructure 7.4% +1.6% Infrastructure 6.9% +5.4% Hedge Funds 4.3% Hedge Funds 3.1%
MSCI World 11.1% MSCI World 4.4%
Source: Burgiss Q4 2016 benchmarks (global private equity, global real estate, global infrastructure), Hedge Fund Research (HFRI Fund Weighted Global Composite Index), Bloomberg (MSCI World, dividends reinvested in the index) as of December 31, 2016. Past performance is no guarantee of future returns
CONFIDENTIAL 19 Looking forward
> Expect continued inflows into global private equity – Enduring strong performance (absolute and relative) – Investor need for returns – Surplus liquidity needs re-deploying to retain allocations
> Investment levels to remain stable – Relatively large inventory of ‘dry powder’ and ample debt availability – Asset pricing necessitates high conviction – GPs should balance need to invest with rising macro-political risks
> Current benign economic conditions supporting returns – Economic data remains short-term positive globally… – …for now – Top GPs possess differentiated value creation skills
CONFIDENTIAL 20 Global Markets Review 2017
> Reflections on the current macro environment
> Global private equity perspective 2016 / 2017
> Private markets outlook
CONFIDENTIAL 21 Private markets – Demand drives change
Structural Underpinning to Growing Number of Past Performance - An Private Markets’ Expansion New Entrants Increasingly Unreliable Guide Assets Liability Gap First-time funds Same-quartile persistency 450 33% Total (PensionTotal 8.2 4.3 400 Funds) 350 25% State & State Local 300 22% & 3.8 1.9 US Local Pensions 250
200 USFeder Federalal 1.5 1.9 Pensions 150
100 USPrivat Privatee 2.9 0.59 50 Pensions 0 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 2000 - ’04 2005 - ’09 2010 - ’13
Source: Preqin
CONFIDENTIAL 22 Adapting to tomorrow’s environment
Conventional Wisdom Cutting Edge
Data-driven analysis # Funds 40 - 50 Depends on risk-return objectives
Re-underwrite everything GP Churn Less is more Churn is critical
Commitment Consistent through the cycle Track the fundraising cycle Pacing Even ticket sizes
Front-load secondaries J-Curve Goes with the territory Prudent use of credit lines
Tail-End Opportunistic asset sales
Portfolio Portfolio Construction Patience is a virtue Management Tail end divestitures
Sub-Asset Class Broader use of private markets Stay narrow on private equity Focus Value/growth/yield mix
Deep & embedded Market Coverage Open door policy Integrated across platform
Manager Thematic focus Best GPs in each geography Selection Balance portfolio
Investment due diligence + Due Diligence Performance is all that matters
operational and ESG due diligence Investment Process Investment
CONFIDENTIAL 23 Accessing global private markets through a listed vehicle
Four key reasons to choose HVPE for your listed private markets exposure
1. Strong performance > Last five years: annualised NAV return 10.1% in USD; 15.2% in GBP > Since inception: annual NAV return 6.9% in USD; 12.6% in GBP 2. Daily liquidity > Median share trading volume equivalent to £0.5 million per day > More than £250 million of shares traded in last 12 months 3. Managed risk > Well-diversified portfolio; strong balance sheet > Low volatility in NAV and share price since 2010 4. Discounted entry > Share price trading 10-13% below NAV/share in first half of May 2017 > Uplift to carrying value has averaged 30-50% since 2012
HVPE is poised to become the default option for investors seeking global private equity exposure through a listed vehicle
All performance figures are as of 31 January 2017 except where indicated. Past performance is no guarantee of future returns
CONFIDENTIAL 24 Public markets can be volatile
News headlines indicate the level of short-term emotion at play in the listed markets
Black Monday sees world's stock markets Brexit panic wipes $2 plunge - but how scared should we be? trillion off world markets Daily Mirror Guardian
Aug 2015 Jan 2016 Jun 2016 Nov 2016
FTSE suffers worst stock Wall Street welcomes market start in 16 years Trump with a bang Telegraph CNN
Image sources: Daily Mirror, CNN (Factset data), Getty Images
CONFIDENTIAL 25 HVPE invests for the long term
HVPE has invested steadily through periods of short-term public market volatility
HVPE NAV (£) HVPE Share Price (£) FTSE 250 (£) FTSE AW (£)
£15.00
£14.00
£13.00
£12.00 Sep 2015: HVPE Main Market Listing
£11.00
£10.00
£9.00
£8.00
£7.00 Jan-2015 Jul-2015 Jan-2016 Jul-2016 Jan-2017
Apr-Sep 2015: Apr-Sep 2016: $103m drawn down for $115m drawn down for new investment new investment
Past performance is no guarantee of future returns
CONFIDENTIAL 26 Annual results - highlights
HVPE’s financial results for the year ending 31 January 2017 were released on 12 May 2017
> NAV growth in the year of 10.3% in USD (24.8% in GBP) > Share price increase of 21.1% in USD (37.2% in GBP) > Realised uplifts continued above 30% > New investment exceeded distributions > Share trading turnover and daily liquidity continued to improve
* See www.hvpe.com for the full report Past performance is no guarantee of future returns.
CONFIDENTIAL 27 New investors
> In the year ending 31 January 2017, more than 33 million shares were traded in the market > HVPE appeals to a broad range of investors, from individuals to large institutions > Examples of known large buyers/categories are shown below
Buyer Year to 31 Jan 2017 (millions) Prudential PMG £80
OMGI £30
Other UK institutions £40
UK wealth managers £30
Swiss/Nordic wealth managers £10
Private individuals £10
Total £200
Data as of 31 January 2017
CONFIDENTIAL 28 Current shareholder profile
New investors from the UK, Europe and Asia continued to build positions in the shares
> Non-US ownership had risen from 52% in September 2015 to 72% as of April this year > Buyers include large institutions (+18%), index funds (+5%), private wealth managers in the UK and continental Europe (+4%), and retail investors (+1%)
September 2015 April 2017
Other Other 8.5% 9.9% US 27.7% US UK 47.8% 43.7% UK 62.4%
* As at 30 April 2017
CONFIDENTIAL 29 HVPE portfolio construction
> Building Blocks > Geographic Diversification > Sub Asset Classes Performance > HVPE Portfolio Construction Targets > Actual Diversification
CONFIDENTIAL 30 Private equity portfolio building blocks
Each portfolio building block has to be diversified based on its own unique risk/return profile
Strategy Secondary Primary Direct
Vintage Year 2014 2015 2016
Geography US Europe Asia RoW
Stage Buyout Venture Mezzanine
Size Small Mid Large
Investment Manager Industry Strategy
CONFIDENTIAL 31 Benefits of geographic diversification
.Probability Density Return Comparison Diversified US and Global Portfolios 50% (even allocation over 3 vintage years) US Global Portfolio Portfolio 40% % < = 1.0x 6.3% 0.0% 1.77x 1.0x < % <=1.5x 9.7% 11.6%
30% 1.5x < % <= 2.0x 75.9% 40.7% 2.0x < % <= 2.5x 7.9% 27.5% 1.97x 2.5x < % <= 3.0x 0.2% 19.4% 20% % > 3.0x 0.0% 0.8%
10%
0% 1.00x 1.50x 2.00x 2.50x 3.00x DPI Multiple US Median Global Median US Diversified Porfolio Global Diversified Portfolio > Geographically diversified portfolio has a median DPI of 1.97x compared to the median DPI of 1.77x for a diversified US portfolio with the same venture/buyout weights* > Diversified US portfolio delivers below 1.0x return in 6.3% of cases, while the return on a globally diversified portfolio is always above 1.0x** using this simulation
HarbourVest proprietary data set; Vintage years 1995 – 2012; Funds with residual value <20% *Global portfolio weights are as follows: 55% US/15% Europe/15% Asia/15% RoW; 15% Venture/85% Buyout **US portfolio weights are as follows: 15% Venture/85% Buyout. Past performance is no guarantee of future returns The graphic and data above are based on a Monte Carlo simulation. See Note 1 for more information on the construction of this simulation CONFIDENTIAL 32 Sub asset classes performance
Performance of sub-asset classes across cycles 3 Yr 5 Yr 10 Yr Legend Rank 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 IRR IRR IRR
Asia 1 104.3% 83.1% 33.4% 12.0% 33.1% 38.1% 37.5% 22.1% 26.1% 11.6% 15.5% 14.6% 16.4% 20.6% 25.0% 28.0% 21.8% 20.9% 16.8% 15.8% 12.2%
Euro Buyout 2 28.1% 18.7% 20.4% 10.2% 32.5% 36.9% 37.5% 20.3% 24.2% 10.9% 10.7% 11.3% 14.8% 20.2% 18.2% 22.8% 16.9% 15.3% 16.7% 15.0% 12.0%
Global Secondaries 3 19.1% 17.7% 20.3% 9.8% 17.3% 25.3% 29.8% 19.8% 20.3% 9.0% 9.2% 10.6% 14.5% 16.9% 17.5% 20.5% 16.3% 15.2% 15.7% 14.8% 11.2%
US Buyout 4 13.3% 16.9% 14.7% 9.4% 16.6% 23.8% 22.1% 17.8% 15.4% 8.8% 9.1% 9.9% 14.1% 15.8% 15.9% 18.2% 14.7% 14.2% 13.9% 14.2% 10.8%
US Growth 5 10.6% 14.5% 11.4% 8.9% 16.1% 20.2% 21.9% 17.2% 13.4% 8.6% 8.2% 9.4% 14.0% 15.2% 14.9% 16.5% 13.8% 11.3% 12.9% 13.4% 10.4%
US Venture 6 10.6% 12.4% 10.7% 8.4% 15.9% 20.0% 20.1% 16.1% 12.6% 7.8% 8.0% 9.4% 13.5% 14.6% 13.9% 15.9% 13.7% 9.4% 12.2% 12.7% 10.3%
Global Credit 7 5.9% 12.1% 9.3% 6.1% 15.3% 20.0% 18.6% 16.1% 11.5% 7.7% 7.9% 9.3% 13.4% 13.3% 12.4% 15.4% 12.7% 8.6% 10.1% 12.1% 9.9%
US Credit 8 5.6% 10.4% 8.0% 2.6% 13.2% 18.8% 17.8% 12.2% 7.8% 7.2% 7.1% 8.9% 13.3% 11.2% 10.1% 8.9% 12.2% 6.8% 9.6% 11.7% 9.6%
Global PE Energy 9 5.6% 10.1% 5.1% 0.4% 10.4% 13.4% 16.1% 11.9% 7.1% 7.1% 7.1% 8.7% 11.2% 10.5% 9.5% 8.4% 12.1% 6.4% 7.9% 10.0% 9.4%
US PE Energy 10 5.0% 9.9% 2.3% 7.9% 10.1% 8.9% 8.3% 6.7% 6.9% 6.8% 8.5% 1.0% 10.4% 1.3% 7.1% 6.0% 6.3% 7.5% 8.9% 7.1%
Global Infrastructure 11 4.8% -3.0% 3.6% 8.3% 5.5% 7.6% 4.2% 6.5% -0.6% 8.2% 0.3% 8.9% 1.0% 4.1% 5.1% 5.3% -3.0% 2.1% 5.5%
Global PE 12 -4.8% 0.0% 3.6% 1.6% 2.1% 6.1% -1.6% 7.7% -0.4% -3.4% 1.3% 5.2%
US Economy OECD Global Economy
Source: Cambridge Associates net LP pooled returns as of 9/30/2016, RecessionAlert.com Euro Buyout returns represented in EUR > Some strategies prove to be more correlated and Takeaways: volatile relative to the economic cycle > Diversify across key markets > It is hard to predict the top and the bottom > Commit continuously > Performance can vary dramatically > Don’t time the market
Past performance is no guarantee of future returns
CONFIDENTIAL 33 HVPE portfolio construction targets
> HVPE commitments are made with reference to a set of agreed five-year targets > The Board reviewed and revised these targets at the end of 2016 > Other external/macro factors will influence portfolio composition over time
INVESTMENT PORTFOLIO CONSTRUCTION TARGETS
By Stage By Geography By Strategy
. 65% Buyout . 65% US . 60% Primary . 30% Venture and Growth Equity . 18% Europe . 25% Secondary . 5% Mezzanine and Real Assets . 12% Asia Pacific . 15% Direct . 5% Rest of World
CONFIDENTIAL 34 Actual diversification at 30 April 2017
> The current breakdown by stage, geography and strategy is shown below
INVESTMENT PORTFOLIO DIVERSIFICATION
By Stage By Geography By Strategy
. 63% Buyout . 62% US . 46% Primary . 31% Venture and Growth Equity . 19% Europe . 30% Secondary . 6% Mezzanine and Real Assets . 12% Asia Pacific . 24% Direct . 7% Rest of World
Data as per 30 April 2017 Monthly Factsheet
CONFIDENTIAL 35 HVPE long-term performance
> HVPE vs. Public Markets > NAV Total Return Vs. Peers > Share Price Discount to NAV
CONFIDENTIAL 36 Long-term NAV total return (USD) HVPE total NAV return including the total distributions of $0.49 per share is now 87% since inception, representing annual growth of 6.7% vs. 4.2%* for the FTSE AW on a total return basis $20.00 $18.66 $18.47 $18.00 HVPE NAV ($) FTSE AWI TR $16.12 $16.00 $14.38 $16.75 HVPE Share Price ($) $15.86 $14.00 $12.46 $12.00 $11.42 $10.39 $10.24 $10.00 $8.65 Cumulative Return (6 Dec 07 – 30 Apr 17) $8.00 $7.61 HVPE NAV ($) 86.6% $6.00 HVPE Share Price TR ($) 60.5% $4.00 FTSE AW TR 46.8% $2.00
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Apr 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2017 HVPE NAV $10.39 $7.61 $8.65 $10.24 $11.42 $12.46 $14.38 $15.86 $16.75 $18.47 $18.66 3.9% (26.8%) 13.7% 18.4% 11.5% 9.1% 15.4% 10.3% 5.6% 10.3% 1.0% FTSE AW TR 242.2 140.3 200.3 240.7 233.1 269.5 305.0 327.9 307.7 365.4 387.0 (8.1%) (42.1%) 42.8% 20.1% (3.2%) 15.6% 13.2% 7.5% (6.2%) 18.8% 5.9%
* Compound annual growth rate calculated through 30 April 2017 Past performance is no guarantee of future returns
CONFIDENTIAL 37 NAV performance compared to peers (GBP)
> HVPE is ranked among the top performing listed private equity funds for NAV growth over five years, and, as of 31 March 2017, is the top performer in its peer group since inception in December 2007
HVPE NAV Performance vs. Peers*
200% 195%
150% 133%
103% 97% 100% 93% 75% 68% 58% 57% 50% 33% 23% 23%
0% NAV TR 1 Year NAV TR 3 Years NAV TR 5 Years NAV TR Since Inception
HVPE NAV growth Peer Median Average NAV Growth FTSE AW TR*
Source: Edison Research / MorningStar / Datastream data, 31 March 2017 * All figures GBP Past performance is no guarantee of future returns
CONFIDENTIAL 38 Share price discount to NAV
> HVPE’s discount continues to narrow and is now inside the listed fund-of-funds average > The market does not yet give full credit for HVPE’s long-term performance > Increased marketing and communications activity is helping to build demand
Current Share Price Discount/Premium to NAV
3i Group 43.6% F&C Private Equity Trust 3.7% Electra -2.1% Standard Life Euro Private Eq -8.2% HarbourVest Private Equity -10.3% UK FOFS Weighted Average -11.3% ICG Enterprise Trust -13.2% NB Private Equity Partners -13.2% JP Morgan Private Equity -16.5% Pantheon International -16.6% Aberdeen Private Equity -20.2% Altamir -26.3% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50%
Source: J.P. Morgan Cazenove Investment Companies Daily Interactive Stats sheet as of 10 May 2017
CONFIDENTIAL 39 Financial performance and portfolio highlights
> Investments and Commitments > Credit Facility > Realisations > Uplift on Carrying Values > Portfolio Growth > Expenses
CONFIDENTIAL 40 Investments and commitments to 31 January 2017
Activity during the period (in millions except % data)
Year Ended Year Ended Financial Summary 31 January 2017 31 January 2016
Commitments to HarbourVest funds $425.0 $526.4
Total Investment Pipeline $1,200.5 $1,043.0
Cash Invested in HarbourVest funds $270.0 $211.0
% of Investment Pipeline* 22.4% 16.7%
. Since 31 January 2017 (to 30 April 2017), HVPE has made additional commitments of $97m
* % of Investment Pipeline at prior financial year-end, adjusted for commitments made during the year
CONFIDENTIAL 41 Total unfunded commitments at 31 January 2017
. Of the total $1,201m in unfunded commitments (Investment Pipeline), $322m (27%) is unallocated . The rolling coverage ratio rose slightly from 104% to 105% during the period as the net cash position was maintained
Investment Pipeline Rolling Coverage Ratio (31 January 2017) At 31 January 2017 Cash + Available Credit Facility $675m
Unallocated Current Year Projected Realisations $269m $322 A: Total Liquid Resources $944m Allocated $879 B: Next Three Years’ Estimated Investments $898m
Rolling Coverage Ratio = A/B = 105%
1-3 yrs 4-6 yrs 7-10 yrs >10 yrs
$598 $152 $49 $79
CONFIDENTIAL 42 Credit facility
> HVPE has a $500m revolving facility provided jointly by Lloyds and Credit Suisse > Facility was successfully renewed in December 2016 > Runs to December 2020 > Commitment fee is 115 bps per annum on the undrawn amount > Margin over LIBOR on the total of any drawn amount scales as follows: – 300 bps up to $250m – 330 bps up to $500m
CONFIDENTIAL 43 Profile of realisations year to 31 January 2017
> Cash from realisations decreased in the 12 months to 31 January 2017 following record exit activity in 2014 and 2015 and a return to more ‘normalised’ M&A and IPO activity in 2016 > The portfolio is positioned for investment and future growth > The 2005-8 vintages continue to generate the strongest realisation flow, with an increasingly significant contribution from the 2011 vintage
INVESTMENT PORTFOLIO REALISATIONS BY VINTAGE YEAR % Realised during 12 months ended 31 January 2017 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Pre-2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Past performance is no guarantee of future returns
CONFIDENTIAL 44 Uplift on carrying value at realisation to 31 January 2017
> The weighted average uplift achieved for the largest transactions (85% by value) at realisation was 30% (at an average multiple of 3.7x cost*) in the 12 months ended 31 January 2017 > Realisations from the Venture portfolio were particularly strong, with an average multiple on cost of 5.2x
Weighted Average Multiple on the Cost of Investment Weighted Average Uplift % on the Carrying Value*
6x 40% 5.2x 30% 30% 31% 30% 30% 4.1x 4x 3.7x 2.9x 3.6x 20%
2x
0x 0% Total Venture Buyout M&A IPO Total Venture Buyout M&A IPO
* Uplift represents weighted average return for the 148 largest M&A and IPO transactions which represent approximately 85% of the value of the known transactions during the financial year. This analysis represents a subset of the transactions and does not represent the portfolio as a whole. Additionally, this analysis does not reflect management fees, carried interest, and other expenses of the HarbourVest funds or the underlying managers, which will reduce returns. Past performance is no guarantee of future returns
CONFIDENTIAL 45 Portfolio growth to 31 January 2017
> Value growth in the portfolio is analysed regularly in order to verify the asset allocation strategy > During the year, value growth of the direct portfolio was particularly strong > Buyout investments grew strongly; Early Venture saw a pull-back as a result of broad-based, but modest, valuation declines > By geography, RoW saw the strongest growth
INVESTMENT PORTFOLIO GROWTH Gain over 31 January 2017 value, adjusted for new investments during the period
By Stage By Geography By Strategy
20% 20% 20% 20% 15% 15% 13% 15% 12% 12% 15% 11% 9% 10% 10% 10% 8% 6% 5% 3% 5% 5% (3%) 0% Buyout Growth VC Other 0% 0% Equity Europe Asia US RoW Primary Secondary Direct -5% Early Pacific Venture
Past performance is no guarantee of future returns
CONFIDENTIAL 46 HVPE total expense ratio
> HVPE’s Total Net Expense Ratio is 2.17% of NAV on a run-rate annualised basis > This has declined considerably in recent years, and compares well against peers > This figure does not include fees and carried interest paid to third party managers within the HarbourVest funds themselves, which are deducted at source from the distributions received by those funds
HVPE Total Expense Ratio 6.00%
5.00%
4.00%
3.00%
2.00% % of Average of NAV % Average
1.00%
0.00% 2009 2010 2011 2012 2013 2014 2015 2016 2017
HVPE Operating Expenses HVPE Management Fee HVPE Carried Interest HVPE Total Expense Ratio (TER)
CONFIDENTIAL 47 Total expenses to 31 January 2017
> HVPE incurred direct operating expenses of $10.9m in the year ending 31 January 2017, down from $11.2m in the previous year > Total expenses fell marginally from 2.19% of NAV in 2016 to 2.17% in 2017
$40.0 Carried Interest $35.0 $31.5m $30.4m Management Fees $30.0 (HarbourVest) $25.0 Management Fees (Co- investments) $20.0 Other Expenses
$15.0 Directors' Fees and Expenses $10.0 Professional Fees $5.0 $10.9m $11.2m Investment Services $0.0 Year Ended 31 Jan Year Ended 31 Jan Credit facility 2017 2016
CONFIDENTIAL 48 Key take-aways
> FTSE 250 company > Focused, consistent strategy: private equity fund of funds > Continuous exposure through the private equity cycle > A carefully selected, diversified portfolio > Integrated, complementary approach: primary, secondary, and direct co-investment > Run by a high quality manager > Currently trading at a discount whilst realising assets at a premium
Visit us at www.hvpe.com
Upcoming events > Capital Markets Session 4 October 2017 > Ten-Year Anniversary 29 November 2017
CONFIDENTIAL 49 Appendix
CONFIDENTIAL HVPE managers and investments
> Top 10 Managers > Top 10 Portfolio Companies > Notable Exits
CONFIDENTIAL 51 Top 10 managers by share of HVPE NAV at 31 January 2017
> No single manager represents more than 1.8% of the portfolio > Portfolio includes household names as well as more specialised groups
Manager Region Stage % of Investment Value
Thoma Bravo US Buyout and Venture 1.8%
Welsh, Carson, Anderson & US Buyout and Mezzanine 1.5% Stowe Compass Partners International Europe Buyout 1.4%
TPG Capital US Buyout 1.3%
The Blackstone Group US Buyout 1.3%
Index Ventures Europe Venture and Growth Equity 1.2%
Health Evolution Investments US Growth Equity 1.2%
Lightspeed Venture US Venture and Growth Equity 1.2% Partners Insight Venture US Venture 1.1%
Hellman & Friedman US Buyout 1.1%
CONFIDENTIAL 52 Top 10 companies by share of HVPE NAV at 31 January 2017
> No single company represents more than 2.2% of the portfolio > As of 31 January, the top 10 companies shown below represented 11.8% of the portfolio value, while the top 100 companies represented 40%
% of Investment Top 10 companies Region Description Value Lightower Fiber Networks US Fibre optic 2.14% telecommunications Press Ganey US Healthcare data provider 1.34%
Preston Hollow Capital US Speciality finance platform 1.33%
Capsugel US Drug delivery systems 1.31%
LeasePlan EUR Leasing and fleet management 1.12%
Acrisure US Provider of insurance and consulting 1.05% services Infinitas EUR Education content and services 0.97%
H-Line Shipping ASIA Gas shipping business 0.93%
Wayfair US Online retailer 0.86%
Ministry Brands US Software solutions provider 0.77% for faith-based organisations
CONFIDENTIAL 53 Notable exits, 2014-16
> Below is a selection of particularly interesting companies sold from within the HVPE portfolio in recent years > With more than 7,000 underlying company investments, HVPE typically sees 30-50 liquidity events per month
Company Date Country Stage Exit route
GoPro Jun 2014 US Venture NASDAQ
The Trainline Jan 2015 UK Buyout M&A (KKR)
Auto Trader Mar 2015 UK Buyout LSE
Glaukos Jun 2015 US Venture NASDAQ
Worldpay Oct 2015 UK Buyout LSE
PhotoBox Oct 2015 UK Venture M&A (Exponent & Electra Partners)
China Hydroelectric Corporation Dec 2015 China Venture M&A (Shenzhen Energy)
Quotient Clinical Dec 2015 US Venture M&A (GHO)
Swissport Feb 2016 EUR Buyout M&A (HNA Group)
US Foods May 2016 US Buyout NYSE
As of 31 July 2016, HVPE retains a holding (directly or via an underlying manager) in a number of the public companies listed above. Company names shown for illustrative purposes.
CONFIDENTIAL 54 Disclaimer
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 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 or any of their respective affiliates and are not intended to be an offer, or the solicitation of any offer, to buy or sell any securities in any jurisdiction.
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.
Continued on next page
CONFIDENTIAL 55 Disclaimer (continued)
STRICTLY CONFIDENTIAL
This document and this presentation are being distributed in the United Kingdom only to (i) 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 (as amended) (the “Order”), or (ii) persons who are high net worth entities falling within Article 49(2) (a) to (d) of the Order, and/or (iii) persons to whom it may otherwise be lawfully communicated, and (iv) "qualified investors" as defined in section 86 of the Financial Services and Markets Act 2000, as amended (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.
By participating in this presentation or by accepting any copy of this document, you agree to be bound by the foregoing limitations. The distribution of interests in HarbourVest Global Private Equity Limited (the “Fund”), a closed-ended investment company organised under the law of Guernsey, in Switzerland will be exclusively made to, and directed at, qualified investors (the "Qualified Investors"), as defined in the Swiss Collective Investment Schemes Act of 23 June 2006, as amended ("CISA") and its implementing ordinance. Accordingly, the Fund has not been and will not be registered with the Swiss Financial Market Supervisory Authority (FINMA). The representative of the Fund in Switzerland is Hugo Fund Services SA, 6 Cours de Rive, 1204 Geneva. The Paying Agent in Switzerland is Banque Cantonale de Genève, 17 Quai de l'Ile, CH-1211 Geneva 2, Switzerland. The place of performance for Interests of the Fund offered or distributed in or from Switzerland is the registered office of the Representative. Copies of the Prospectus, Articles of Association and annual and semi-annual reports of the Fund can be obtained free of charge from the Representative.
CONFIDENTIAL 56 Additional information
The performance information includes realized and unrealized investments. Unrealized investments are valued by the applicable general partner in accordance with the valuation guidelines contained in the applicable partnership agreement. Actual realized returns on unrealized 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. Accordingly, the actual realized returns on these unrealized investments may differ materially from returns indicated herein.
In considering the prior performance information contained herein, investors should bear in mind that past performance is not necessarily indicative of future results, and there can be no assurance that any fund will achieve comparable results or be able to implement its investment strategy.
1. These model (hypothetical) portfolios are intended for illustrative purposes only. Performance information for each hypothetical portfolio utilized a Monte Carlo Simulation. These are based on the actual cash flows of a proprietary data set that includes partnership investments made by HarbourVest Funds and accounts, along with partnership data from external sources. The capital calls and distribution data is based on historic partnership investment cash flows, but does not represent the actual experience of any investor or any HarbourVest fund. The results of the simulation are impacted by an uneven representation of funds with different vintage years, sizes, mangers, and strategies, and a limited pool of investment cash flow data. The actual pace and timing of cash flows is likely to be different and will be highly dependent on the underlying partnerships’ commitment pace, the types of investments made by the fund(s), market conditions, and terms of any relevant management agreements. The results presented are based entirely on the output from numerous mathematical simulations. The simulations are unconstrained by the fund size, market opportunity, and minimum commitment amount, and do not take into account the practical aspects of raising and managing a fund. The simulated hypothetical portfolio results should be used solely as a guide and should not be relied upon to manage your investments or make investment decisions. Past performance is not a guarantee of future returns, and there can be no assurance that future funds or accounts will achieve comparable results. Investments in private funds involve significant risks, including loss of the entire investment.
2. This information (Distributed / Funded, Total Value / Funded, Gross Portfolio IRR, Gross IRR) is presented on a gross basis and reflects the performance of the investment portfolio, including primary fund investments, secondary investments, and/or direct co-investments. For primary and secondary investments, these returns reflects the fees, expenses, and carried interest of the underlying partnership investments, but do not reflect management fees, carried interest, and other expenses borne by investors in the HarbourVest funds/accounts, which will reduce returns. Gross Portfolio IRR represents the annual return calculated using monthly cash flows from the funds managed by HarbourVest to and from the various partnerships or companies in which the HarbourVest funds invested during the period specified. These returns do not represent the performance of any specific fund or the return to limited partners.
3. This performance includes all primary investments made by HarbourVest-managed funds and accounts for the period specified. This performance excludes three custom accounts for a single client that made investments primarily in emerging venture capital managers, which was outside of HarbourVest’s core private markets focus.
Continued on the next page
CONFIDENTIAL 57 Additional information (continued)
Certain information contained herein (including financial information and information relating to investments) has been obtained from published and non-published sources. Such information has not been independently verified by HarbourVest. Except where otherwise indicated herein, the information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof.
These materials do not constitute an offer to sell or the solicitation of an offer to buy interests in any investment sponsored by HarbourVest Partners L.P. or its affiliates. Any offering of interests in the funds will be made solely pursuant to the Private Placement Memorandum of the funds and subscriptions will be accepted solely pursuant to definitive documentation. Offers and sales of interests in the funds will not be registered under the laws of any jurisdiction and will be made solely to “qualified purchasers” as defined in the Investment Company Act of 1940, as amended. These materials do not purport to contain all the information relevant to evaluating an investment in the funds.
Past performance is not a guarantee of future success and there can be no assurance that investors in funds will achieve the returns discussed herein. Investments in private funds, involve significant risks, including loss of the entire investment. Before deciding to invest in a fund, prospective investors should pay particular attention to the risk factors contained in the fund documents. Investors should have the financial ability and willingness to accept the risk characteristics of an investment in a fund.
CONFIDENTIAL 58 Forward-looking statements
This document contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, forward-looking statements can be indentified by terms such as ‘‘anticipate,’’ ‘‘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 of HarbourVest to sponsor the formation of and capital raising by, and to manage, new private equity funds; HVPE’s financial condition and liquidity, including its ability to 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 performance. Any forward-looking statements are only made as at the date of this document, and the Investment Manager neither intends nor assumes any obligation to update 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 regulation. In light of these risks, uncertainties, and assumptions, the events described by any such forward-looking statements might not occur. HarbourVest qualifies any and all of its forward-looking statements by these cautionary factors. Please keep this cautionary note in mind while reading this report.
REGISTERED OFFICE INVESTMENT MANAGER Richard Hickman HarbourVest Global Private Equity Limited HarbourVest Advisers L.P. Director, Investment and Operations Company Registration Number: 47907 c/o HarbourVest Partners, LLC [email protected] Ground Floor One Financial Center +44 (0)20 7399 9847 Dorey Court 44th Floor Admiral Park Boston MA 02111 St Peter Port U.S.A. Guernsey GY1 2HT Tel +1 617 348 3707 Tel +44 (0)14 8170 2400 Fax +1 617 350 0305 Fax +44 (0)14 8170 2407
CONFIDENTIAL 59