-- Sign of ongoing consolidation and liquidation in the
sector
-- HarbourVest says the portfolio is high-quality, mature
investments
-- Conversus retains public security investments and cash
LONDON--HarbourVest Partners on Monday said it has bought rival
listed private equity company Conversus Capital L.P.'s (CCAP.AE)
portfolio of private equity investments for $1.4 billion, or $22.11
per Conversus share as at April 30, highlighting the consolidation
taking place in the listed private equity sector.
HarbourVest is making the acquisition jointly with its listed
affiliate, HarbourVest Global Private Equity Ltd. (HVPE.AE).
Conversus is retaining its public security investments and
cash.
"We are buying a very attractive portfolio with mature,
cash-generative assets of a very high quality," John Toomey,
managing director of HarbourVest Partners, told Dow Jones
Newswires. "The investments are all in top-end funds including
Blackstone Group (BX), Carlyle Group (CG) and Apax Partners."
The sale by Conversus Capital follows the company's strategic
review February when it said it was considering all possible
options including a sale.
Conversus has already spent two years selling assets and
returning money to investors rather than making new investments in
an attempt to boost its share price and narrow the discount at
which its stock traded relative to its net asset value. Its
discount at up to 40% typically hovered above the 30% average for
the sector.
The deal is just the latest example of consolidation in the
sector as private equity companies are being forced to sell assets
and return cash to investors because of wide share-price
discounts.
A key measurement of a listed private equity firm's success is
the relationship between its share price and its net asset
value--generally, the total worth of its holdings minus
liabilities. Theoretically, the share price and NAV should be the
same, but share prices across the sector have recently traded at
deep discounts because of declining levels of investor confidence.
The discount widens further in falling markets and when
private-equity owned companies don't perform well.
Most recently U.K.-listed company 3i Group PLC (III.LN) faced
investor calls for it to shift strategy including a halt to new
investments being made, the sale of existing investments, and the
return of net cash to shareholders. The ongoing calls led to the
replacement May of the company's chief executive, Michael Queen.
New CEO Simon Borrows has said he is committed to reversing the
share price.
-Write to Marietta Cauchi at marietta.cauchi@dowjones.com