HarbourVest Global Private Equity Ltd.

Good afternoon, ladies and gentlemen, and welcome to the HarbourVest Global Private Equity Limited investor presentation. Throughout today's recorded meeting, attendees will be in listen-only mode. Questions are encouraged and can be submitted at any time just using the Q&A tab situated on the right-hand corner of your screen. Please simply type in your questions at any time and press send. Due to the attendance on today's call, the company will not be able to answer every question it receives during today's meeting. However, the company can review all questions submitted today and we'll publish those responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll and I'm sure the company would be most grateful for your participation. I'd now like to hand over to Stephanie Hocking, Head of Investor Relations. Good afternoon.

Good afternoon, everyone. Thank you so much for joining our HVP update call. I'm joined today by Richard Hickman, Managing Director of HVP and Ed Warner, Chair of HVP. We're going to focus in this session predominantly on the annual results which were released at the end of May and hopefully you've seen those and had some time to digest those but also provide a little bit of an update more generally in terms of the market and where we're seeing things now. I will pass over to Ed to say a few brief words in terms of introduction, and then Richard will talk us through the presentation that we have prepared for you. And we will, at the end, have some time for Q&A. As Mark mentioned, there's the chat function on the right-hand side of the screen. Please do type away as we're leaving plenty of times for Q&A. Ed, I'll pass over to you.

Thank you, Stephanie, and good afternoon, everybody. Thank you very much for showing an interest in HVPE, whether you're a shareholder or just curious in following the company or possibly thinking about investing in the shares. I'm going to leave nearly everything today to Richard to take you through, as Stephanie said, the year gone by, but also current circumstances and conditions in the private equity world. But first of all, I just wanted to make a couple of comments about corporate governance. and in particular, the three initiatives which we announced at the end of January. As if you followed the company, you'll be aware we are committed to the highest possible standards of good corporate governance. In my few years as chair of HVPE, we've moved to a fully independent board, and I think that stands as evidence of our commitment to good governance standards. But we spent a lot of time at the back end of 2024 and into 2025 talking extensively to our shareholders to understand how it was they wanted us to respond to the wide discount to net asset value per share that our shares were trading at. And we've come up with three initiatives, which I think put us at the cutting edge or the forefront amongst our peer group of corporate governance and capital allocation matters. And they are firstly, that our existing distribution pool, which you may remember, takes 15% of gross flows coming from our underlying companies and recycles them into returns to shareholders at the moment, principally through or exclusively through share buybacks. Secondly, that and sorry, we doubled that from 15 percent to 30 percent. So we would expect HVPE to be the biggest buyer back of shares amongst the listed private equity sector. Secondly, we've simplified the structure of HVPE. All our new investments going forward will be into what's known as an SMA, a separately managed account. Richard will give you a little flavor of the detail of that. But it effectively de-layers the company, enables us to be more nimble, more flexible and more tactical in dealing with the vagaries, the ups and downs of the private equity world and indeed listed markets. And thirdly, we are very committed to democracy for our shareholders. And so we're the first listed private equity trust to introduce a continuation vote, which is going to take place in about a year's time at the July 2026 AGM. That'll be a very simple vote. 50% majority is required of those voting at the AGM to enable you as shareholders, if you are shareholders, to decide whether you want the company to continue in its present form or not. We very much hope that you do. And as directors, we're shareholders and we'll be committing ourselves, I'm sure, to wanting the company to continue. But it's only right particularly when the discount's been as wide as it has been, that you have a chance to express your voice, however big a shareholder you are. I think that's right. I'm surprised, actually, that you don't have continuation votes right across the investment company world. There are a minority of trusts that have them. I think in time, everyone will. And we wanted to be one of the first, certainly the first in our subsector, to give you as investors the opportunity to have that say at an AGM. I think if you take those three together as a package, I hope you'll recognize that they are bold. They are very shareholder friendly. And I do believe over time, particularly as markets improve and the private equity world improves, that they will be a key component of the discount narrowing and our shares more accurately reflecting the excellence of the portfolio and the companies that we're invested in.

that sit underneath hvpe anyway enough of the governance advert over now to richard who'll talk you through last year's results and then on to current trading richard thanks ed uh good afternoon everyone and thank you very much for for taking the time to join i'm richard hickman i'll take you through a summary of the results and some commentary on the market So for those who are not so familiar with us, we are a listed private equity investment company launched in December 2007. So getting on for 18 years ago. We are one of the most diversified investment companies in our sector. We provide exposure to more than a thousand private companies around the world of material size. We have net assets today of $4 billion, having grown organically from the IPO net asset value of $800 million, whilst also having paid out more than $250 million along the way. We are a member of the FTSE 250 index, the mid cap index in the UK, currently around 60th position with a market capitalization of 1.8 billion sterling or around two and a half billion dollars, trading as Ed hinted at a significant discount to the net asset value. Despite this, however, we have delivered very strong share price returns over the last 10 years. We have seen a 227% gain in the share price as of the results period, which runs to the end of January. That places HVPE actually in the top decile of all investment companies in the UK with a 10-year track record. So even with the discount being frustratingly wide in recent times, shareholders have still achieved a very strong return over the last decade. Now that's been driven, of course, by the performance of the portfolio. So the box in the middle at the bottom of the slide shows you the 13.1% compound annual growth rate in NAV per share in US dollars over that 10 year period. And that NAV per share figure is 2.7 percentage points ahead of the FTSE All World Total Return Index over the same period. So 2.7% per annum outperformance net of all fees and costs. Now I'll take you through the key messages in the results and then subsequently through the detail. So here we summarise the key points. Net asset value per share up 7.2% in the year. Significant recovery on the prior two years where we saw weakness following the very strong 2020 and 21 periods. But we are still somewhat below the long run NAV per share growth rate that I just cited. We do believe that we're on a firm trajectory back towards that level of growth. And I should point out as well that our action in terms of capital allocation policies, specifically the buybacks, have helped that NAV per share figure. So 1.9% of that 7% was actually driven by the buyback accretion. So we're proactively driving Nav4Share, not only through the portfolio, but also through the share buybacks. We saw a pickup in the realization rate during the year. So we ended the year with just under 10% of Nav realized compared to 8% in the prior year. So we are seeing progress, albeit we're still some way below the long run average of 20% per year realizations. So the industry as a whole has been through a period of constrained liquidity and we are no different. But we have seen encouraging signs this year of a pickup in activity, particularly if we look at underlying portfolio company transactions in terms of the number of those transactions. That tends to be a leading indicator, of course, of the cash flow that subsequently comes through to the fund. We did increase the size of our credit facility to accommodate a potentially extended period of negative cash flow. So we have $1.2 billion in total on the facility, of which we've drawn $515 million. And we do have some cash on the balance sheet as well. So there's ample headroom to bridge any further periods of negative cash flow. During the year, going back to the left-hand side in the middle now, the share price gained 19%, so a very strong performance during the year in review, partly due to the initiatives that Ed just went through. So I think the market responded well to the announcement of those initiatives, and we did see very strong share price growth. I mentioned buybacks. I won't belabor If I bring that figure right up to date, since we started buying back shares in September of 2022, we have now repurchased more than $200 million, bringing that up to the present day. So a very substantial allocation to buybacks, which has helped the NAVBA share. The distribution pool allocation doubled to 30%. The SMA has been announced. I'll talk you through that shortly. And as I mentioned, the continuation vote scheduled for July of next year. So the move to the SMA, the separately managed account structure, The motivation behind this is to simplify HVPE as a proposition. We have until now operated a relatively complex process of committing to HarbourVest commingled funds. So we've been effectively investing alongside other clients that HarbourVest has as a firm. So insurance companies, endowment funds and sovereign wealth funds, for example. And we sit alongside those entities in what we call commingled funds, i.e. funds involving multiple investors. Going forward, though, we will be committing via a fund of one, a vehicle that is set up specifically for HVPE, tailored to the needs of HVPE as a listed company. This will give us increased control. So moving to the second box on the slide, the flexibility to fine tune investment pacing, rather than committing to a fund that is investing at its own pace to suit all investors, we will have more control over that pacing. And similarly on the flip side, towards the end of the investment period, we'll have potentially the ability to request inorganic liquidity, i.e. secondary sales from within the SMA, which should be possible at narrower discounts than we might have to take if we as HVPE would sell positions in HarperFest funds themselves. The third box talks to look through gearing being reduced. There's a slide later on where I'll show you some figures on that. But essentially, at the moment, because we invest through the Harbour Vest funds, those funds use bridging facilities in the early years of their life cycle to, as the term suggests, to bridge capital calls and distributions. What we'll do with the SMA, we think, is use very little, if any, of that type of credit. And so the fact that we'll no longer commit to the HarbourFest funds means that our exposure to that look through borrowing that they're using will decline as those funds mature and pay down. So that, again, will simplify the balance sheet. It will make cash flow more predictable when we model several years ahead. and should also help in terms of market perception of the level of gearing that we have in the fund. And finally, there'll be no increase in fees or costs. The management fee on the separate managed account is set at 60 basis points charged on net asset value. So until there are significant assets in the SMA, of course, the actual cash value of the fee will be very low. And the carried interest terms will mirror the existing terms that we have on the commingled funds. So they're carried straight across into the SMA. A note on the portfolio composition. We have not seen any major changes. So that's really the headline here, with the exception of the phasing, which I'll come to. But as a refresher for those who are less familiar with us, we do have the largest exposure in our portfolio allocated to buyout investments. So those are control deals where an underlying private equity manager owns a majority of the equity and controls the business. So they tend to be better developed companies. They're at a later stage in their lifecycle and they can be clearly very rewarding investments. We have exposure globally to buyout investments at multiple stages from small through mid to large cap opportunities. But notably, we do have substantial exposure to venture and growth equity investments. Now, that's been a tale of two halves really over the last five years. We saw very strong outperformance in 2020 and 21 from very, very creative realizations from that portfolio, notably several IPOs. Since 2022, however, that has been a drag on the performance of the overall fund. We are seeing that, I think, turn as of the latest financial year as the performance turned positive again, but it has been more volatile than the buyout portfolio. That is not to make light of it in terms of the opportunities ahead. We do think there are many attractive companies in the portfolio that have within that part of the asset allocation model. Finally, we have mezzanine and infrastructure investments, a smaller part of the portfolio, but actually since 2022, the strongest performer. So those generally lower risk, lower volatility investments have helped to hedge the portfolio against the volatility of venture and growth equity. So that's been a very helpful contributor to returns, particularly in the last three years. Moving to the middle of the page, the strategy allocation is, I think, increasingly unique in the sector. We have a significant weighting to primary funder funds. So those are essentially opportunities to invest in the funds raised by some of the best performing private equity firms globally as they are raising funds, as those funds are incepted. So that gives us real control over the groups that we're investing with. We don't have to wait for opportunities to come along on the secondary market or the direct co-investment market. We can commit to funds as we choose, as they are being raised. And HarbourVest, through relationships going back 20 or even 30 years, in many cases, has preferred exposure, preferential exposure to many of these new funds, particularly in the venture and growth space. SAA model. The secondary funds, 30%, a significant contributor to returns, of course. They tend to deliver more rapid return of cash, so they can be very attractive investments and has delivered very strongly over the years. And finally, we have the direct co-investment part of the portfolio, which, as the name suggests, is going into portfolio companies directly rather than through an underlying fund, still with a HarbourVest fund wrapper, but going directly into those companies. And so that on a company by company basis and build portfolios that are potentially very, very strong in terms of earnings growth and have limited correlation internally in terms of sectors and geographies. So moving to the geographical side of the page here, we have significant assets in North America, 62% of NAV, which actually is underweight versus the public markets these days. The comparison index we use, the FTSE All World Total Return has around 70% in in North America. So we are now somewhat underweight. There is no plan to increase that target. We do want to retain our global exposure. So we do have 21% of assets in Europe against the target of 24%. So we will be deploying additional capital into Europe in the years ahead. We also have 15% in Asia Pacific, focusing increasingly on the up and coming private equity destinations, in particular, India. We've seen some strength in Japan as well, as that market has continued to develop and other parts of Asia are developing at pace. So we have, in addition to the largest single country, which is still China, we have many other attractive destinations for capital in the region. And then I mentioned at the opening of this slide that we'd seen some change in the phasing, which is the bottom left circle chart here. where actually because the portfolio has matured in recent years, many of the investments have moved into the growth phase and to a lesser extent, the mature phase. So this is a simple function of time that obviously, you know, as time goes on, the investments develop and mature. But 18 months ago, in the growth phase, we had less than 39% of assets. Now we have 49%. And the growth phase is often actually a great source of liquidity in the portfolio, as buyers are often drawn to companies that are at the peak of their growth potential. So we should see increasingly there is a backlog of assets, of quality assets, awaiting an exit event, which should result in more cash coming back into the fund. And then finally, by industry, we have a broad mix of sector exposures. We have a notable overweight to technology and software as a function of the venture and growth equity exposure, but some really exciting opportunities in that sector as I'll come to. Otherwise, we're very well balanced across the typical asset light sectors that you'll see predominant in private equity portfolios. So here I wanted to give a few examples from our top 25 companies list. Clearly, we're very well diversified. We have, as I mentioned at the beginning, more than 1000 material private company investments. So I want to set this in context that the largest company here is just over 2% of NAV. And when we get to number 25, you'll see the top right hand side of each box where we're down at 0.3% of NAV. Individual companies tend not to move the dial too much either way for HVPE, but of course the aggregation of some of these exciting opportunities can really drive our performance. So we have in this group of assets, firstly, a very diverse mix. We have everything from infrastructure through consumer companies, right through to technology, software, and the pinnacle of that, AI-based companies. So notably, Wiz at number two, it's in the process of being acquired by Google for a significant uplift on its prior value. that is pending regulatory clearance, but I think widely expected to go through. Wiz is a cloud-based data security business, so that's been a real success story. Turning down to kind of position number 12 here, Scale AI, roughly in the middle of the slide. That has been subject to significant investment by in $14 billion for a stake of just under 50% in that company. So that's been a real success as well for the original backers, and of course, by extension for HVPE shareholders. And we also have some perhaps better known names like Revolut, which many of you will have heard of and may use as a consumer as well. That is one of the most successful fintechs that we've billion dollars, I believe. We also have Action Retail, which is 3i's largest portfolio company. We co-invested into that business several years ago, and that's been a very strong performer as well. And then finally, Visma, number 25, perhaps better known within private equity rather than a household name, but that's a phenomenally successful deal that HG completed in 2006 and has held ever since. that company announced an intention to IPO in London at the beginning of next year. So we're starting to see more activity, more companies aspiring to IPO and an increase in the number of transactions that we're seeing even within our top 25 companies. Turning to the vintage profile, this is now more of a zoomed out picture again, looking at the whole portfolio. And this chart shows you in blue the latest allocation, essentially, of NAV to each of those vintages. So companies that we invested in in 2018 comprise 11% of the total NAV of the fund, for example. The grey bars show the position in the prior year. So you can see the very steadily every year. Notably, we don't have any overweight position here. You might be surprised that in retrospect, what now look like boom years of 2020 and 21, we don't have an overweight in the portfolio in those vintages. We've been very disciplined as a pacing and capital calls have been very steady, even over the last five years, despite global events and the volatility that accompanied those events. So hopefully reassuring. We're very steady, very consistent in the way we deploy capital. Now, a word on relative growth rates just in the 12 months ending January. Clearly, you know, we're long-term investors. We generally look at horizons of five or 10 years, but it's helpful to see the relative performance of each part of the portfolio over short time periods. And I think particularly reassuring on the left that venture and growth equity staged a recovery and started to contribute again to NAV per share growth. The worst year we saw for venture and growth equity, essentially calendar year 2023, was a 12% decline in value. So we've really turned around and that's starting to contribute again. Buyouts, very solid, 6.4% growth across small, medium and large cap. So they do tend to be less volatile investments and we've seen fairly consistent, albeit below trend growth rates over the last couple of years. And I mentioned private credit and infrastructure was the standout performer, 8.7% of the year, marks the third year where it's been the strongest single category. So moving to the middle, primaries, 5% growth. Now, I should be clear that primary funds are the main access route for venture and growth equity. So there's an overlap here in terms of the cause of relative performance. But we did see secondaries post another fairly strong year, 6.7%. But direct co-investments took the lead this year with just over 10% growth. So we are starting to see, led by directs, we're starting to see that performance really, really come through. By geography, North America regained the lead after two years with Europe as the top performer in our portfolio. But not by a huge margin. We do think Europe continues to present very attractive opportunities and, as you can see, is growing at a respectable pace. Asia was slowed by continued challenges in the China portfolio. But again, even there, we're starting to see something of a turnaround. So rest of world, a tiny exposure, it's leg individual investments in the air. I should state as well, zooming out again, that the performance in the year, it's not so clear on this slide, but we had net gains on investments of $256 million, of which 151 million was in the form of realized profit. So the NAV per share growth was actually led by, even in the weak exit environment, led by profitable realizations, crystallizing value, rather than underlying managers writing up valuations on an unrealized basis. So I think important to point out that even in a challenging year for liquidity, we've still seen the majority of our value growth come from the realized gains. And continuing on that theme, it's a chart that regular viewers and longer term investors will have seen before. The realized uplifts that we generate on exit have started to rebound as well. So you'll see each of these bars average gain in value from the exits we've made every year. So the portfolio companies that we've sold in a year, the total value of those positions versus the carrying value of those same company investments prior to the exit. So in other words, if we held a company at, say, $10 million of value and sold for $14 million, that would be a 40% uplift on exit. So you'll notice the peak in 2021. Not surprising, that was a standout year led by venture IPOs. But in normal times, we tend to see between 30% and 50% uplifts, as you'll see if you look at the period from 2012 through 2019. And it does, if we look at the right-hand side now, following a dip in 2024, we are now back to the normal range of realized uplifts with 37% in the year. So very encouraging. And when we split that down into the different categories, we see M&A deals, i.e. full company acquisitions, either by trade buyers or other private equity managers, were at a higher premium than IPOs. Of course, there were not many IPOs. They were very small transactions. When we look at the split between buyout and venture, perhaps surprisingly, we saw venture and growth equity achieving a higher premium on exit. And so I think that speaks to some of those early opportunities to realize fast-growing companies that we're starting to see as of the beginning of this year. A view into the portfolio now in terms of trading, because of the diversification of our fund, it's very difficult for us to to look at every single company in the portfolio in this way. But we are getting better. We have more than half of the net asset value represented in this sample now of portfolio companies that we analyze. And so we saw very strong growth across the sample in revenue terms, 13 percent in the year. And even more importantly, in EBITDA terms, i.e. earnings, we saw nearly 19 percent growth. So the difference in those numbers obviously suggests margin improvement as well as as well as strong, strong organic growth. We have a broad base in the portfolio of rapidly growing companies. So of the sample included here, nearly three quarters of those companies were growing EBITDA to some extent. And of those, nearly three quarters were growing at more than 10% a year. So we have more than half of the sample growing rapidly. And so this is not just driven by a small based pattern that we've seen. And then moving to the bottom left, we saw a continued prudent level of debt across the portfolio. So four and a half times EBITDA is the average debt multiple in the sample set. Typically in private equity buyout deals, we see five and a half to six and a half being quite normal on the way in, in terms of new deals. So our portfolio is somewhat more conservative than perhaps an average portfolio would be. And the valuation multiple, the overall enterprise value came in at 14.9 times EBITDA. So a very conservative level of valuation. And again, comparing those figures side by side, you can see, you know, the debt component in the capital structure is around a third, whereas equity is around two thirds. So there's a very substantial level of equity in the average deal that we have. And now comparing those multiples by sector against the S&P world, which is the index we were able to gather this data from, you'll see in the three sectors on the left, HVP's portfolio is markedly lower in terms of valuation multiple than the public market as represented by the S&P world. To be clear, not the S&P 500, this is a global index. So the real standout here is TNT, i.e. technology, media and telecoms, where the public multiple on average is 25 times EBITDA, whereas our portfolio is just over 15. So quite a substantial value gap in those positions. And then if we look at the total on the right hand side, our total portfolio 14.9 times, as I just mentioned, versus 17.5 for the index. So, you know, quite substantial potential, we think, you know, there's a real discount in terms of private markets valuations in our portfolio that could mean there's value to be unlocked by IPOs and continued M&A. And now we wanted to give some insight into the source of value creation. So how do we generate returns in our portfolio? And here we've taken one part of our allocation approach, which is the direct co-investments, around 20% of the fund. And here we have really good data company by company over many years and multiple HarbourVest funds that gives a really good sense for how the returns have been delivered. And so just to break this bridge chart down, the leftmost bar is showing you that 70% of the total value creation in this direct co-investment portfolio was driven by what we call operational improvement, i.e. growing EBITDA or revenue, usually both, of course, but depending on the valuation metric, we use either of those. So really strong fundamental growth in the trading performance of the businesses, and that's clearly driven in large part by the ownership model within private equity, the long-term collaborative approach that is taken to drive value. And we note within that bar that EBITDA growth over the whole period on average was 52%. So in other words, profits may have started at a given company at $10 million a year. They were more than $15 million a year by the end of the whole period. Revenue growth a little bit lower, but clearly pointing to margin enhancement again, which is very much a value adding approach. The next bar shows actually a negative contribution from deleveraging. So it's a kind of double negative. So I'll unpack that. It basically means that the amount of debt in the companies on average increased over the whole period. So taken in isolation, that would be a detractor from the value creation for equity holders, i.e. the private equity funds. However, we do mention in the comments above on the slide that the increase in debt tends to be used for buy and build strategies. So acquiring smaller businesses to bolt on to a platform company, typically at lower valuations. So those acquisitions have helped deliver the value creation from the first bar, essentially. So there's an interconnectedness between these variables. And finally, multiple expansion delivered 52% of the value creation, noting that deleveraging was negative. And that was, of course, partly driven by favorable market trends. I don't think anyone could could doubt that that's been helpful over over the last decade or more over which this analysis has been performed. However, the The fact is that part of that growth in multiple is also due to professionalization of the business. So during a private equity hold period, a business may go through several phases of professionalization in terms of the way runs its accounts, the way it runs its operations, the sales force and so on. So all of those improvements that set the stage for future profitability and continued growth are captured to some extent in a higher valuation multiple that may be paid on exit. So that is not all market driven. That is partly driven by the performance of the companies themselves. So I thought that would be helpful, gives some insight and hopefully helps reassure investors in HVPE that despite the changing macro environment, the fundamental value creation model remains valid in private equity. And I think we'll continue to see returns of a similar level. And certainly in our base cases at the underlying fund and co-investment level, that is the basis on which we are committing capital going forward. Now, a few words on the tariffs. I appreciate this may be becoming stale as the market has largely, has almost fully rebounded from this. We did move quickly in early April to try to assess the level of risk in the portfolio as a result of the tariff policies announced on the 2nd of April and which evolved, of course, over time. So we took the initial announcement, the tariffs as they were, and the investment teams assessed the underlying portfolios within each major strategy that HarbourVest runs. So the primary, secondary, direct, also the credit and the infrastructure. And you'll see across the bottom of the chart the labels by strategy there. And through either engaging with the underlying managers or the underlying companies themselves, depending on the strategy, the teams categorize the portfolios into essentially three buckets. So we have red where the company is expected to experience a major impact. Amber, where there may be some significant level of impact, and green, where there's essentially no impact expected from the tariffs. And we assess this directly in terms of the sales channels for that business and also the supply chains. We did not attempt to model any macroeconomic repercussions of the tariffs. We simply assess the impact of the tariffs themselves on that business. And so you'll see on the right hand side, we weighted those categories by HVPE's exposure. So you have an overall picture for HVPE, which shows that 1% of our companies are regarded as high risk, 13% medium, and 86% low risk. So hopefully a reassuring message. And I think intuitively correct as well, because we know that in private equity, businesses tend to be more service oriented. They tend to be mid-sized businesses or smaller businesses that may not be as international at the point of investment and so have less risk from cross-border trade. And so I think we can take comfort that our portfolio is relatively resilient, whatever may happen in the months and years ahead. And final substantial slide here on the distribution pool. This for again, longer term holders will be more familiar with this, but we introduced the pool in February 2024 as a more structured way to allocate capital for the benefit of shareholders. So, prior to February 2024, the buybacks we executed were really on an ad hoc basis. So, the board would assign a certain amount of capital to buybacks and we would execute on that on an ad hoc basis. Under the distribution pool, it's far more structured. We have a monthly allocation process. So when cash comes in from portfolio exits, whether they're natural exits or secondary sales, that cash is essentially captured and 30% of that is allocated to the distribution pool. So in this chart, you'll see that the dark blue bars are the allocations. in the interest of time here, but you'll see substantial allocations even from the first part of 2024. The mid-blue in the middle shows you the buybacks that have been completed as of the 31st of January, and the light blue shows you the balance of the 31st of January 2025. So the balance was $38 million, having spent $106 million in buybacks. And the remainder of the chart on the right hand side is a forecast for the remainder of this year, based on the 30% allocation that Ed mentioned at the beginning. So if distributions from the portfolio come in at the level we forecast earlier in the year, which I should be candid, there is some risk to that forecast, given everything we've seen in recent months. Nonetheless, the forecast for distributions represents a partial return to normal. So we've been relatively conservative, albeit there is still risk to that number. But if that materializes, we will see $180 million allocated to the pool in total from January to December. We've already seen part of that come through, around $30 million. So there's potentially much more to come if distributions do recover. And that will result, of course, in more buybacks, more demand for the shares, and more accretion in Napa share. The final piece here on the SMA, we wanted to provide a view on the look through gearing, the benefits to the look through gearing of the SMA. And this is a relatively robust forecast. All it requires is that we cease to make new commitments to the HarbourVest funds and those funds continue to operate their credit lines in a normal way as they have done in recent years. So we will see fund level borrowing, as we call it, the look through exposure to those bridging facilities decline from just over $500 million down to almost zero in the next four years. So that should help to reassure investors that the balance sheet underlying the shares is increasingly robust and conservative. I should stress that we do not see undue risk at the moment. We have a modest amount of look through gearing driven by cash flow in the portfolio. It is not a deliberate strategy to increase gearing or drive returns. It's purely a cash, a working capital management policy. So no concerns, but I think there'll be an incremental improvement as that look through borrowing declines over time. And in conclusion, just to bring it all together, we think HVP is very well positioned. The portfolio has proven highly resilient, as you can see from this chart that shows NAV per share over time. We have not seen a substantial decline in any year here, really, since back in 2009 following the financial crisis, which is not shown. But we've seen very steady growth over over this time period, compounding at 13% per annum. And the share price, given where the discount is today, around a 40% discount to the net asset value, represents, in our view, a potentially very attractive entry point at this juncture. We are seeing a recovery in cash flow in the portfolio. We're seeing new exits announced on a regular basis. We should continue to see assets realised at a premium to carrying value. And I should stress that even since 2022, we have effectively realised more than a third of the portfolio at a premium to carrying value, i.e. a premium to NAV at that time. So we're continually demonstrating the NAV is robust. It is returning to growth, and we hope to see that reflected in the rating of the shares going forward. So with that, I'll hand over to Stephanie for Q&A.

That's great, Richard. Thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions just using the Q&A tab situated on the right-hand corner of the screen. Just while Stephanie takes a couple of moments just to review the questions you've submitted, I'd just like to remind you recording this presentation along with a copy of the slides and the published Q&A will be available via your dashboard. Stephanie, you've received a number of questions from investors. Thank you to everybody for engagement. If I may just hand back to you, Stephanie, if you could take us through the Q&A and then I'll pick up from you at the end.

Great. Thank you, Mark. Well, thank you all so much for your questions. We've got quite a lot already, which is great. The first question I'm going to put to you, Richard, is with regards to borrowing. The look through borrowing is forecast to decline. What about the trust level gearing? Should you not be using some additional borrowing to buy back shares? Even if the cost of borrowing is higher than the past, surely the returns from buybacks is higher.

That's a great question. So the borrowing at the HVP level on our own credit line is at the moment $515 million. We generally try to hold around $100 million of cash as well on the balance sheet. So the net borrowing is lower. We use the credit line really just for working capital purposes, as I mentioned. So we are not trying deliberately to increase gearing in terms of the company capital structure. We do use the credit line for buybacks. So the distribution pool is a notional allocation. Clearly, at the moment, we are net drawn on the credit facility. So any buyback we're executing is using through the calculations there and we we do believe that even with the interest cost the accretion to NAV per share on the assumption that cash flow does pick up in the future and we're able to pay down the debt which which is what we expect you know does you know it it's still highly accretive even accounting for that borrowing cost. So I think it's a great question and we do regularly review the comparisons, we look at the cost of buybacks, we look at the opportunities in new investments and we make those comparisons on a regular basis.

Thanks, Richard. I've got another question here on the SMA. How much loss in NAV terms do you think the move to the SMA will cost the fund over the next few years, or do you not accept this premise?

We're not expecting any tail-off in performance as a result of the SMA. We'll fundamentally unchanged in terms of the strategic asset allocation targets. So where I went through the slide that shows strategy, stage, geography, there are no changes there. We'll reflect that in the SMA going forward. All it means is that instead of investing via the HarperVest commingled funds and accessing the opportunities that way, we're doing it via a dedicated vehicle. We still have first in line allocations, so we are not losing priority. versus the commingled funds, the SMA will sit alongside those funds in the allocation process. So the ultimate outcome we expect should be materially unchanged by the SMA.

Thank you, Richard. A question here on the investment strategy. HVP has many more holdings than your peers and a lower allocation to co-investments. Do you see this as a positive or in terms of holding HVPE in addition to other funds, or do you think you have a superior investment allocation strategy?

Well, naturally, I would definitely assert the latter. We do follow guidance from an internal team within HarbourVest, the quantitative investment science group, who put together portfolio construction models for all clients, including, and they, of course, work with HVPE. So we target a total return strategy with limited volatility. And once we accept that premise, which we think is entirely suited to a listed format, we then look at the strategy allocation that that implies. And that does suggest primary funds are important. They are a key driver of value growth over the long run. They provide differentiated exposure in terms of the underlying general partners, particularly in venture and growth equity. So those of our peers who have a smaller exposure to primaries, I'm sure everyone makes their own choice, but one thing that they would struggle with is allocating to some of those top performing ventures. managers in particular, where the funds are oversubscribed, they don't tend to come up on the secondary market as often as the perhaps more mainstream buyout investments that we might see. Secondaries are really important to us. The 30% allocation, that's been a very strong performer in the portfolio. And our secondary team generally do create significant value in terms of asset selection and deal structuring. So our team was one of the pioneers of what we call GP led secondary deals that involve creating solutions for the general partner to continue to hold rapidly growing businesses. So I'll stop there. But, you know, we clearly do review our allocations regularly and we're strong believers in this kind of cornerstone approach where HVP is very, very well diversified. It can be regarded as almost a one-stop shop for an investor who wants quality private market exposure.

Thank you, Richard. This question I'll put to you, Ed, on the AGM. The forthcoming AGM will be held in Guernsey. Why not in London?

It can't be in London because we're Guernsey domiciled. So we're tied in that way. That's why we have a capital markets day, which was held a few weeks ago, where everybody is invited. Any shareholder can come along. And that's an opportunity to sweep up questions to the board that you might otherwise want to ask at an AGM. I would envisage us doing exactly the same thing next year at the 2026 AGM when we have the first ever continuation vote for HVPE. So I would urge you all, if you've got questions, interaction with us that you'd like to pursue, then come along to that Capital Markets Day next year.

Thanks, Ed. I've got a question here on the accounts that I'll put to you, Richard. Why do you produce your accounts in a foreign currency?

So US dollars. We are denominated in U.S. dollars. The majority of our portfolio at the underlying level is in U.S. dollars. We have 62 percent of our portfolio in North America and many of the Asia funds are also dollar denominated. So actually it's nearly 80 percent of our exposure in total is in U.S. dollars. So that's the functional currency of the fund. I appreciate it can cause some confusion. We do translate the key numbers into Sterling in the report, so NAV per share and so on. But that's something we're required to do under the accounting rules.

Thanks, Richard. I've got a question here about the team that will be managing the SMA. Could you tell us a bit more about the team that will be managing the SMA? And we've got another question here just asking about Harbour Vest credentials in the SMA world?

Yeah, sure. So ultimately, the team responsible for HVPE's investment performance is the HVPE Investment Committee. So that committee will continue unchanged. That comprises the Harbour Vest CEO, John Toomey, the Chief Investment Officer, Greg Stento, Head of Primary Investments, Caroline Espinel, and myself. So the four of us are collectively responsible for the overall performance. Under the old model, where we committed to harbour vest funds, the investment teams across the firm, there are 270 investment professionals. So that group across the firm were managing those funds. So effectively, the day-to-day managers of the investments are collectively the entire investment team within HarbourVest. That will continue under the SMA. It'll just be that instead of going through the funds, we'll access those same opportunities via our dedicated vehicle. So there's no change in terms of the decision making. Essentially, it's purely the structure.

Thank you. Would you consider the trust to be akin to an index fund in the private equity sector?

We do hear this sometimes. It's not a bad way to think about it. It does imply a passive allocation, though, which of course is not what we're about. We are actively selecting the underlying investments. And to put some perspective on that, our total number of companies and deal opportunities that we select, it tends to be around 5% of the available opportunities that we see. So there are I think investors tend to underestimate the size of the private markets and the number of companies that, you know, that exist for investment. And we are a small fraction of the total. But we have proved through our share performance that we outperform the industry average. We outperform many of our peers, certainly over long periods of time. So I would I would make a small edit to that really and perhaps suggested say, you know, it's a favorably selected So if we're pushed.

Great. And we've got two questions here on 2020 and 2021 vintages. Do we have any colour on how they've been performing so far? And in terms of the average uplifts, of course, they're pretty impressive. Do you think the last few years have been muted because 2020 and 2021 were so good?

I mean, I think it wouldn't be surprising if some of the investments in those years, you know, perhaps struggled in terms of valuations in the interim. We, as I mentioned in the presentation, we don't have an overweight exposure to those vintage years. We have seen some declines, notably in the venture and growth portfolio post 2022 as interest rates rose and public markets fell. You know, we did see underlying managers take write downs to their investments. So I think that has largely worked its way through the system in terms of our portfolio. And so, you know, we're looking ahead and we see the value creation potential that lies ahead of us in the next few years.

Thank you, Richard. Question here on the target for mezzanine and infrastructure. We aren't near the target for this allocation. But why is that? And also despite the strong performance?

Yes, probably should have mentioned when I went through the deck, it was a target that we revised around 18 months ago. So we did increase from 10 to 15%. And this is part of the reason we are a long way off that target is, ironically, it's the structure under the old model where we had to wait for new HarperVest funds to become available and to make commitments to those strategies. Whereas with the SMA, we do have more flexibility. So we should see more rapid progression towards the target level in the years ahead. I should be clear, though, we set the targets with a five-year horizon, precisely because in private markets, it's actually quite difficult to move the portfolio than something we would hit in the next six or 12 months.

Thank you. Thank you all so much for your questions. I think we've got time for one more, which is on the products that HarbourVest offers. Does HarbourVest offer similar products to HVP, to pension funds and other institutional investors, but then these investors would pay full NAV for this similar product?

Well, for various reasons, I can't talk about specific HarperVest products other than HVPE. But I think it's fair to say that the majority of investors in private markets are committing capital essentially either to blind pools or to funds valued at NAV. So HVPE is one of the rare opportunities, frankly, in private markets to acquire these types of assets at a discount of 40%. It doesn't really happen anywhere else. I mean, the private secondary market for buyout funds tends to trade in the single digits discounts. Venture and growth equity funds are wider discounts, but still nowhere near the kind of 40% of which our shares trade. So I think it's a good question. It's a source of frustration, I think, to all of us involved in the listed private equity space that there aren't more investors who take advantage of these value opportunities.

thank you richard and well thank you all so much for joining us today thank you for your questions your engagement and wishing you a great rest of your day and we look forward to seeing you next time

That's great. Stephanie, Richard, Ed, thank you very much indeed for your time this afternoon. Ladies and gentlemen, I could ask you not to close the sessions. We'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views and expectations. This may take a couple of moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the team from Harbour Vest Global, Private Equity Limited, I'd like to thank you for attending today. Good afternoon.