BOSTON/NEW YORK – HarbourVest Partners, L.L.C. is marketing its sixth fund-of-funds targeting investments in the United States. The launch is significant because it signals HarbourVest’s further movement away from committing to buyout partnerships and direct deals.
If it reaches its $2 billion target, HarbourVest Private Equity Partners VI, L.P. is planning to invest $500 million in buyout funds, $250 million in direct deals and $1.25 billion in venture capital partnerships. The fund-of-funds will target mainly larger buyout partnerships, a source close to the fund raising said.
The group’s 29% allocation to buyouts from its current fund-of-funds is less than the 33% it planned to invest from Fund V. The more dramatic change, however, is the increase in its venture capital allocation to 60% from 40% in Fund V – which could spell a jump in dollar value to $1.25 billion from $400 million. HarbourVest’s allocation to direct investments, meanwhile, will be 12.5% of the new fund-of-funds, as opposed to 30% in the prior vehicle.
HarbourVest is setting a target for the fund-of-funds that is twice as large as the $1 billion it raised for Hancock Venture Partners V, L.P. in 1997. The firm spun out of Hancock Mutual Life Insurance Co. at the time it launched that fund in 1996.
The firm early this year stayed on its fund-raising schedule by wrapping the $2.1 billion HarbourVest International Private Equity Partners, III, L.P. HarbourVest raises capital from institutional investors such as Colorado Public Employees Retirement Association, Louisiana State Employees’ Retirement System and Massachusetts Pensions Reserve Investment Trust.