HarbourVest to raise $5B FoF

HarbourVest Partners plans to close on about $5 billion for its eighth, U.S.-focused fund-of-funds in the second or third quarter. About 40% of that will be earmarked for venture capital funds, according to a source familiar with the fund.

The firm split HarbourVest Partners Fund VIII into three selections for its limited partners: buyout, mezzanine/distressed debt, and venture. Given the selections that investors made, expect the firm to invest about $2.5 billion in buyout funds, $2 billion in venture funds and $500 million in mezzanine/distressed debt funds. The Boston-based fund-of-funds giant has so far lined up about $3.5 billion in total commitments, and the $2 billion venture slice is reportedly already teed up.

HarbourVest last formed a U.S. fund-of-funds in 2002. That fund secured $4.4 billion in commitments. The firm raised $4.6 billion for its sixth fund in 1999.

Some backers of HarbourVest actually thought the new fund should shrink from the previous sizes to ensure it would be used to back only the highest quality general partners, says the person familiar with the fund. HarbourVest declined comment.

HarbourVest is expected to do its share of re-upping this year, but may also review the funds of spinout groups. Last year it backed the inaugural fund of Centerbridge Capital Partners, started by the former head of private equity for The Blackstone Group, Mark Gallogly, and former Angelo, Gordon & Co. Partner Jeffrey Aronson. HarbourVest is also in the midst of re-upping with The Jordan Co.’s The Resolute Fund II.

Other buyout firms HarbourVest has committed to in the past include Brockway Moran & Partners, GTCR and Garnett & Helfrich Capital.

HarbourVest, which has offices in Boston, London and Hong Kong, is fresh off closing a pair of international funds. At the end of last year, it closed HarbourVest International Private Equity Partners V-Partnership Fund at $3.1 billion. That fund, which is earmarked mostly for European funds, is already half committed.

The firm also recently closed HarbourVest International Private Equity Partners V-Asia Pacific and Rest of World Partnership Fund at $527.3 million. That fund is earmarked for partnerships in Latin America, Eastern Europe and South Africa, along with the Asia Pacific region. —Mark Cecil