HarbourVest Global Private Equity Ltd.

and welcome to the HarbourVest Global Private Equity Investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and could be submitted at any time via the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Stephanie Hocking, CEO, Head of Investor Relations.

Thank you very much. Good afternoon, everyone, and welcome to our semi-annual results update call. My name is Stephanie Hocking, Head of Investor Relations for HVP. I'm joined today by Ed Warner, Chair of HVP, and Richard Hickman, Managing Director for HVP. Ed's going to open the call by saying a few words and then pass on to Richard, who will talk us through the results highlights, as well as provide a bit of an update on the distribution pool buybacks and our cash flow position. We will have dedicated time for questions at the end, so please do fire away and pop those questions in the chat.

Thank you, Stephanie. And good afternoon, everybody. Thank you for joining us. Many of you doing this for, well, certainly not the first time because these semiannual presentations are becoming something of a habit for us. And I hope you recognize that they are a very effective way for us to reach out to a broad range of our shareholders and to give you access very much to the manager of HVPE or the management team. Clearly, we're meeting at a time in which the shares have been much more buoyant in recent months than they had been through much of last year. No idea whether that's down to the three initiatives that we announced at the end of January or simply an improving environment for private markets. Probably the answer is something of both. We are seeing many more green shoots of recovery across the private market arena around the world. Rich is going to take you through that. But certainly we think things are set very fair as we end 2025 and move into 2026. As you know, we announced our trio of initiatives at the beginning of the year. Each of those, I think, is having a positive effect on sentiment. And certainly we view them as not only very shareholder friendly, but also certainly very investment friendly, as in our investment process now is much more streamlined and effective and nimble because of our separately managed account than has been the case in the past. So all of these things make, to my mind, for a very positive backdrop for the company as we go through the end of the year and into next and a continuation vote at next year's AGM, which I hope will lead to a very resounding positive roster of support for the company, which has got an amazing track record and certainly is surfing the wave of improving private market conditions as we go into next year.

anyway um with with no further ado i'll hand you to richard and i'll be available for questions at the end for anyone that would like to address them specifically to me as the chair and to the board thank you richard thanks ed and thanks everybody for joining we really appreciate your your time today i'm going to take you through the semi-annual results i'll stick to the highlights here i appreciate there's a lot of content I am using the presentation that's on our website, so it's fully publicly available. Any slides I don't cover, please feel free to ponder or peruse at leisure. And we are always available, even after the webinar is finished, for questions via email. So just to set the scene for those who may be less familiar or maybe new to the fund, we are a London listed private equity fund of funds vehicle, an investment company with net assets of $4.2 billion. We IPO'd back in December 2007 at what turned out to be the peak of the prior cycle. And since that date, we've compounded our net assets by 5.6 times after all costs have been deducted. So we haven't raised any further equity post IPO. So the portfolio you see today is purely the result of that compounding as we've reinvested proceeds from existing assets over time. We are the most diversified listed fund in this sector in the UK. So more than a thousand private company exposures of material size. We have a global portfolio and it's spread across a variety of businesses at different stages in their development. So we have everything from the very early stage seed venture companies that are just recent startups, through to later stage venture, growth equity, buyout investments in more mature businesses, and then finally infrastructure and private credit, which also tend to be, of course, the more mature end of the spectrum. In terms of the listing, we are a constituent of the FTSE 250 Index and have been now for just over 10 years. We joined that index Clearly, right at the bottom, we were on the reserve list in September 2015. I'm pleased to say we've climbed up to around 50th place today, given the growth in the share price. And that share price total return on the bottom left of this slide, 211% growth in 10 years in sterling, that actually places us in the top decile of all London-listed investment companies with a 10-year track record. So a very creditable performance, even though, as Ed mentioned, we are still trading at a significant discount to NAV, that being around 30% as of today. The share price return clearly has been based on the growth in the portfolio. So the compound annual NAV per share growth rate in the middle of the bottom of the slide of 13.1% in US dollars clearly is a strong rate of growth. That disguises annual variations, of course, but we are consistently delivering those sort of growth rates. And that represents an outperformance on an annualized basis of 2.4 percentage points versus the FTSE All World Total Return Index. So a measure of global public markets were outperforming that quite materially. Now, I would say through the cycle, we've tended to outperform by between three and five percentage points per annum. So we're a little bit below the usual range right now. And that's actually more due to the recent strength in public markets. And that can take time to feed through to private markets portfolios. Managers are often quite reluctant to write up their unrealized valuations fully in line with public markets. And as we go through the presentation, I'll provide some evidence for the conservatism in the valuation process. The semiannual results, I think, delivered quite a few key messages here. Notably, NAV per share growth returned approximately to that long run average I've just mentioned. So we've had two or three weaker years post 2022 with the interest rate rises and the volatility we've seen. in the public markets but i think we are we're seeing signs of a real recovery now so the NAV per share return for just for the half year 6.2% which clearly on an annual basis if we can repeat this performance is back on track with the 13% per annum that 6.2% does include a contribution from the share buyback program where were essentially buying back shares at a discount, canceling those shares and delivering that NAV per share return for continuing holders because there are a small number of shares still holding essentially a large NAV. So that contribution was 0.6 percentage points of the 6.2. So in other words, 5.6 was the real portfolio growth rate and 0.6 was the buyback contribution. We've also seen a pickup in realizations. That has actually come through more actually post period ends. So since the 31st of July, we've seen real strength in the monthly figures, which are all on our website. But even in the half year itself, we did see a modest uptick on the prior half year, so the first half of 2024. And notably, the transaction numbers were up by 16% on that prior half year. So that's, for us, a leading indicator of cash flow coming back because of the structure. It takes time for those realizations to percolate up through to HVPE. The share price return in the six months was weaker than the NAV return, driven by the volatility that we saw, particularly in April and May around the tariff issue. So the share price actually was slightly negative in terms of growth rate for the six months, although since then it's performed very strongly up around 10% post-period end. The distribution pool, which was one of our three key initiatives that Ed referred to, doubling that allocation to 30% at the beginning of the half year really helped us to deploy additional capital into the buyback program. And I'll take you through some detail on that shortly. We repurchased 1.3 million shares, $44 million over the six months. So really quite material, even though realizations were still relatively weak compared to a typical long run average level. And so as of the 31st of July, the total buyback program since inception in September of 2022 has resulted in more than $200 million being deployed and NAV per share contribution of just over 5%. So quite a material development. We also signed, firstly, the heads of terms of the separate managed account in May, followed by the actual limited partnership agreement, i.e. the contract in August. So we are deploying the $125 million allocated for the 2025 tranche as we speak. We expect that the majority of that will be allocated to investments in the year, although it may take time for the capital calls to come through. As I've mentioned, the SMA will simplify the structure. It will, we expect, reduce the need for gearing within our structure, both at the funder funds level, i.e. underneath HVPE, in terms of the borrowing that the HarbourVest funds use, because we will not be committing to new HarbourVest funds. We'll be committing through the SMA going forward. And also the top level, the revolving credit facility that we maintain at the HVPE level, we should, over time, be able to contemplate reducing the size of that facility as well, driven by the more predictable cash flows that we'll see through the SMA. So there are very good reasons to go down this route, and we are confident that it will deliver for shareholders. We also reassuringly remain in a position of balance sheet strength. We had 31st of January, $115 million of cash and $629 million available on the facility. And we're substantially similar today. So real firepower for any unexpected events. If we do see a further downturn, we will not have a problem funding our obligations. And so more on the distribution pool. This chart takes you back right to the inception of the pool in February of 2024. The orange blocks show the contributions to the pool from various sources. The very dark blocks that are negative show the buybacks that we've executed using that capital. And the mid-blue blocks are the balances of various dates. So to quickly retrace the history, We started on the 1st of February, 2024. We rolled in $12 million unspent from our existing buyback program at the time, so that was transferred in. We also seeded the pool with $75 million of capital that was diverted away from what would have been a Harbour Vest Fund commitment. So instead of making a commitment to a fund, we used that capital to allocate to the pool. And the 15% of distributions, as it was then, the month-by-month allocation added $57 million in that financial year. So quite a material amount of capital going in over that time, with $106 million of that utilised for buybacks in the prior financial year. So that left us with $37 million at the beginning of this financial year. And so as we move, I'm now in the middle of the chart, we move to the right and we see 30% of distributions allocated to the pool, $43 million and buybacks of the same amount over that period, leaving us with an identical balance. And then perhaps the most interesting part here is the forecast element with 30% of go-forward distributions for the remainder of this calendar year. We forecast before the Trump tariff issue in April, this is a forecast we put out at the beginning of the year. We do expect to see around $140 million contributed to the pool if distributions come in at the level we expected at the beginning of the year. Now, clearly that is far from guaranteed. We're never sure of the distribution level until really two, three weeks before the end of the year. But I would say that signs are encouraging. We received $89 million in September alone, for example, of distributions of which 30% were allocated to the pool. And traditionally in private equity, the second half of the year is stronger in terms of cash flow as the GPs target the calendar year end to finalize transactions. So what we could see is a real kind of weighting towards that Q4 that we're going through right now, and particularly December tends to be the strongest month of the year. So there is still a chance that we can deliver that full year forecast. And of course, we'll provide an update as soon as we can. And if so, that will result in material additional firepower for the board at its discretion to use for share buybacks. So a quick update on HarbourVest. I'll skip a couple of these slides just because they're more for reference. But hopefully many of you are familiar with many of the faces on this slide by now. But some I'm conscious you may not have met. And so it's useful to remind you of those who are involved in the management of HVPE. So firstly, of course, we have the independent board led by Ed with a mix of directors from both the public and private markets background, including ex-auditors who clearly have an expertise in valuations. And we have a dedicated investment committee in in HarbourVest that is effectively specifically set up for HVPE. So I'm a member of that committee, along with three others. Carolina Espinal, who's the head of primary investing for HarbourVest and clearly has a huge amount of experience in manager selection. We have Greg Stento, who's the chief investment officer for the whole of HarbourVest, not just for HVPE. And John Toomey, who's the global CEO of HarbourVest as well. So you have the most senior individuals in the firm devoting significant time to HVPE. And then last but not least, the team that looks after the day to day. So we have a team across London and Boston, eight individuals altogether who are dedicated to the fund. And in addition to my team, we have 230 Harbourvest investment professionals around the world who are managing the underlying portfolios. So you're really... in buying HVP shares, you're not simply buying into a fund managed by a single individual or even a small group. There is a huge depth of resource across HarbourVest that is dedicated to managing the assets. And furthermore, because we're a funder funds manager, we have more than 600 underlying general partners who each manage their specific element within the HarbourVest funder funds. So you really have this pyramid of resource of expertise in the sector managing the assets that we hold. And then a quick update on HarbourVest itself. I won't go through everything on here, but we are growing rapidly as a firm. We're approaching $150 billion of AUM globally now across all the different strategies that we operate. We're purely a private markets manager, so there's no public markets division. We're a specialist in private markets. And we operate broadly across the majority of disciplines within that space. So we're active in, as I mentioned, buyouts, venture, real assets, infrastructure and private credit. And we're also a truly global investor. We have now 15 offices around the world with a recent opening in Abu Dhabi being number 15. So we have teams on the ground in all the areas in which we're investing. So coming to the portfolio, a reminder of the top-down allocations and how they're looking against our target levels. We have on the left-hand side, the stage allocation, which I've touched on, but to put some numbers around that, the largest single exposure in the portfolio is to buyout investments. Now, for those less familiar, those are investments whereby a private equity manager takes a controlling equity stake in a business, essentially acting as the owner, driving growth in that business, driving efficiencies and bringing to bear expertise generally that's been acquired through similar deals in the past. We invest with some very experienced managers who've done this many times before. and so are generally able to add real value to a business. Venture and growth equity at 31% is a significant allocation. It's something we're proud of within HarbourVest as it's a particular area of expertise. It was the original raison d'etre of the firm when it was established back in 1982. So that's a part of the portfolio that we believe adds real value, even though it can be more volatile. And I'll perhaps give some more remarks on that later on. And finally, the private credit and infrastructure investments, 8% of NAV against a target of 15%. So clearly that's the area that we're looking to increase in terms of allocations going forward. We've seen some very strong performances from the assets in those vehicles that are dedicated to the private credit and infra side. And so we are excited about the opportunities ahead there. And just to complete the picture, the assets that we will transfer there, I mean, that will be essentially, we're relying on natural realizations from the bulk of the portfolio to provide the cash to fund new commitments to the private credit and infra side. So that will happen gradually over time, but we will do our best clearly to rebalance as quickly as we can. In terms of strategy, we're almost on target for all three. The primary investments, i.e., the HarbourVest funds that dedicate capital to newly formed partnerships raised by the likes of Index Ventures, Accel Partners, Andreessen Horowitz on the venture side, or Bain Capital, EQT, Carlyle on the buyout side. as the name suggests, that they are vehicles that are committing to blind pool funds at inception. And we believe that's an important kind of cornerstone of the portfolio. because it allows HVPE shareholders to gain access to the very best underlying managers as they raise funds. And so we as a firm at HarbourVest can assure you that we are securing allocations to the managers that we prefer, the managers that we've worked with for many years. Relying only on secondary or co-investments would not give us the ability to fully control that exposure. That being said, of course, they're important parts of the portfolio. So we have secondaries at 29%. The key benefit there is we're able to build exposures at a more mature stage to some of the same managers that we commit to on the primary side, but we can be more selective in terms of picking and choosing assets once we can see that those have been successful investments. And often we're able to purchase portfolios or individual companies at a discount to NAV as well. then finally the direct co-investment side that gives us a little bit more selectivity we have a large co-investment team globally and they're able to work again with some of the same gps there's a a harmony across the firm in terms of the relationships whereby we are investing alongside those managers into some of their portfolio companies. So that gives us a little bit more ability to steer the portfolio and to select those really compelling opportunities at the company level. Then moving along to geography, we are, in terms of the allocation, we have the largest weighting to North America. That was formerly roughly in line with public markets being, you know, 60%, two thirds of the portfolio. Now with the development in the US market, the US is actually 70% of the global indices. We are not planning to chase that in terms of our allocations, but we do want to remain well balanced in terms of the global exposure. So our target level is 60. We may see that actual exposure come down slightly. over time we also have 23 in europe of which a third is in the uk now so quite quite a significant weighting there and that portfolio as i'll show you shortly has performed very strongly We have Asia at 14%, slightly underweight, the target of 16. And again, we will strive to increase that weighting over the next couple of years. That part of the portfolio has struggled to some extent due to the impact of weakness in China. But we are seeing a pivot towards other geographies in that region, which again, I'll discuss as we go. And then the rest of world, 1%, a target of zero. It's essentially a legacy allocation across some of the underlying primary funds. I won't go into the phase diagram just now. That's an indication of the time that's elapsed since the investments were made. And just suffice to say, we have a good mix of growth, growing assets and mature assets that will throw off cash in the years ahead. And if we go to the bottom left of the slide, you'll see the sector allocations, notably tech and software being the largest single exposure at 35%. And that's actually grown in recent years from 30%. Part of that is I think we've seen very strong performance in those assets. So there's naturally an increase in weighting with the existing holdings seeing growth. But also there's more of a tech theme emerging across some of the buyout managers when they're deploying capital. And frankly, there's often something of a blurred line in terms of defining some deals as to whether they are really focused on tech or whether they're in a traditional sector that is becoming tech enabled. And there's always arguments over how to define those. But I think an important part of our portfolio, something clearly investors should be aware of, it's performing very strongly right now. And we are optimistic for the long term as well. Outside that tech and software sector, the remainder is well balanced. We tend to be focused on somewhat less capital intensive businesses than a typical public market index might be. So you'll see a preponderance of service related businesses rather than asset heavy, but a good balance and very representative really of a private markets portfolio. And then the pie chart or the ring chart on the bottom right illustrates some of the more cutting edge sectors that we have within our venture and growth equity allocation. So companies like Databricks in the AI big data segment, Scale AI in that segment as well. We have a wide range of businesses across biotech that very, very kind of esoteric businesses, but very likely to see growth in the future coming out of that segment. And so I wanted to kind of stress we have a well-balanced portfolio. There is the high-octane component, but we don't want to overstress that or overemphasize it. We do strive for consistent double-digit NAB for share growth. And looking in a little bit more detail, I'll just pick out a couple of points on here in terms of the allocations of the finer kind of granular level. If you look at the buyout allocations, we actually focus more on the medium and the small and micro buyout segment rather than the large buyouts, which make up less than a third of the exposure. And I think that's where the medium and small cap areas where we're seeing more opportunity, frankly, less competition for deals, clearly less of a challenge in terms of debt capital, although that is becoming easier to obtain. And we've delivered really strong growth from those two segments. Similarly with growth and venture, roughly half of our portfolio in that space is growth equity. So they are profitable companies. They're often fairly well established, but there is a clear growth trajectory that we're kind of following there. And then in terms of early venture, we have 11% of NAV. So quite a significant growth. chunk of that allocation. And those early venture funds will sometimes liberate very large businesses that we still categorize as early venture because that was when we first gained exposure. So that's where some of the really exciting opportunities emerge. And finally, the balanced venture at 6%, that is more of a halfway house really between the early venture and the growth equity. So that's where you might see the later stage companies that could still be pre-profit, but will sometimes be relatively large enterprises by that point. Moving across to geography, I've already covered most of this, but just to point out, the UK is now 8% of NAV. That's almost doubled in five years. And that's driven by success stories such as Revolut, the challenger bank, which is raising funds now at a $75 billion valuation. And clearly, you know, our portfolio gives exposure to that type of opportunity well before any IPO that may or may not take place. So I think a good illustration of the kind of potential that we have, even in the UK, which clearly is having its problems right now. But we're still seeing a lot of activity on the private market side. And then in terms of China, we've come down to 4% from 7% five years ago. due to a combination of reduced deal flow from China, given the restrictions that the authorities imposed a while back. But also, frankly, there has been some devaluation of assets as our GPs have recognised increased risk. But we have seen something of a resurgence in China this year, so that may change. We've seen a little bit more focus on India, which is now up to 3% of NAV. and Australia at 2%, which has some of our infrastructure investments. So I think, you know, gives you hopefully a good sense for what really is under the under the bonnet in terms of the portfolio and the likely key drivers going forward. Now, Zoom in a bit on performance just in the six month period, so for the half year that we're covering. And we shouldn't read too much into these numbers. Clearly, you know, we're investing for multi-year timeframes, but it is interesting to see the variation from one period to the next in terms of the contributions made by different segments in the portfolio. Firstly, on the stage allocation, we've seen fairly consistent contributions across the buyout and the venture portfolios in the half year, which has not been the case necessarily since 2022. We've seen weaker performance in the venture and growth. The buyouts have been very resilient, actually, in general. So venture has come back into growth and is now contributing again to the NAVPA share, whereas in recent periods it's been a drag. But actually the key story here, although it's a small segment, is private credit and infra delivering 8% growth just in the half year. And that was driven really by the infra, the infrastructure assets. And I'll go on to some more detail on the next slide. In terms of strategy, we have primary outperforming the other two strategies. And I kind of dropped a hint earlier on that there's a real trend in the listed sector, but also more broadly, there's a trend towards secondary and co-investment allocations in favor of primary. And the narrative there is that clearly there are benefits to acquiring assets at a discount, as secondary funds do, and also the cost efficiency indirects. But actually, I think what's overlooked often is the allocation benefit of primary funds, the fact that it enables us to select those top performing managers and secure an allocation to their new vehicles. It's less opportunistic, it's more strategic. And so we are actually proving, I think, from one period to the next, that primaries really do have a place in a listed portfolio. And then finally, with geography, much more of a variation this time. And that's driven more by FX, frankly, than anything else with Europe gaining on the basis of relatively strong euro and sterling against the dollar in the six months. And these figures, by the way, are all in dollars. So Europe has been strong, but there is some reality behind that. Even in local currency terms, it's somewhat ahead of North America for the six months. And so, again, that may go against established kind of assumptions around geographical performance. We've seen Europe contribute very strongly, most recently on the venture and growth side of the portfolio. And then Asia languishing a little bit there at 1.4%. We do expect a recovery in that region driven by those dynamic new economies that we're investing in. And finally, rest of world, it's now an insignificant part of the portfolio, marginally negative on the six months. So just breaking down the stage chart, which was the leftmost chart on the prior slide, going into a little bit more detail on kind of what's moving within those components. Firstly, in the buyout space, we've seen actually fairly consistent performance across medium, large and the small and micro segments with large actually outperforming marginally. But I think the more interesting split is in the venture and growth equity, where we've seen early venture as the strongest contributor at nearly 10% in the half year, driven by some of those individual success stories that I'll come to later. But also, I think we're seeing something of a rebound there from recent years where early venture was among those three categories was actually the most challenged part of our portfolio. And then the private credit and infra, where we've seen infrastructure deliver an 11.4% return in the six months. That may be somewhat surprising and perhaps seems implausible for assets of that type. But we're actually seeing not only the yield return on those assets, we're seeing improved operating performance in some cases, and therefore improved valuation. So we've seen write ups on, for example, National Gas in the UK, DP World in Australia, a ports business, and Alpha Trains in Luxembourg, which is a train operator. So we've seen almost these investments behave akin to large buyout companies where we're seeing earnings growth as well as the yield return. And private credit somewhat diluted because we've been investing relatively heavily through those private credit funds in newer deals where perhaps they haven't had a chance to revalue or provide the first tranche of yield. So the established investments were generating more like six percent in the half year period. And then I thought we'd zoom out and show the five year numbers just to perhaps give a more meaningful comparison across the sort of timeframe that we're typically evaluating these investments over. And I think firstly, what's perhaps quite surprising is the relative lack of variation here across the different categories. They're all in, you know, with the exception of a couple of the geographical sub regions that they're all in the mid teens or thereabouts or a little bit more. So let's start with stage where we've seen venture and growth equity outperform the other two stages. So over the five years, despite the weakness of post 2022, it's still been a net contributor to returns in the portfolio, which is clearly the reason we've held firm with our allocation at 30 percent there. In terms of strategy, primary is the top performer over five years. So again, and by the way, these figures are all net of fees at both levels in the structure. So IRRs of north of 17% from those primary funds demonstrating the power of the access to those top GPs. And then by geography, Europe, by far the strongest region. And I should say that FX is not a key driver over the five year period. If you look at Euro dollar and sterling dollar, they're essentially roughly the same as they were five years ago, having had some volatility along the way. So we've really seen some strength, genuinely, particularly on the venture and growth side in Europe, as that part of the market has developed, frankly. It's developing in line with the North American approach to venture and growth equity. And the overall return you'll see on the right, 16.6% in IRR terms. The CAGR for HVPE's NAV is 15% over that time. The difference there reflects the different calculation with IRR being flattered a little bit by early cash flows, which we saw in 2020 and 21, and also the impact of OPEX at the HVPE level, which has to be deducted from these numbers. So zooming out even further over a kind of 10 plus year period now you'll see the NAV per share growth indicated by the blocks on the diagram and the share price is the line running through them. You'll see a kind of clear two-phase pattern on this chart that the kind of pre-2022 and these are financial years ending January I should stress so The 2022 bar is 31st of January that year. We saw real strength in that year and the preceding year with north of 30% gains in each of those financial year periods, which really capped off a strong run, actually going right back to 2010, which is not shown here. where we saw very strong double digit growth over that time period. We then slowed down for really two years, 23 and 24. We had a modest NAV decline in 2023 of down 1%. But we're now returning, as you'll see with the orange bar, which is only a six month bar, of course, real growth coming back through. It looks as if we're getting back on trend. The discount to NAV of course is a continued frustration. Our three initiatives that we announced at the beginning of the year are aimed at helping to resolve that as far as we can. We have seen some progress, so even post-half-year end here, we're in at 30% now, which is still unacceptable, frankly, of course. But we are on a positive trend. We do hope and expect that the discount should continue to narrow, barring any unforeseen circumstances in the macro environment. Now, going forward, the portfolio update, I thought I'd touch on some stories around realisations. So some of the figures here, the top left of the slide, we show you that the number of M&A and IPO transactions in the half year, 243 altogether, which is up 16% on the same period in the prior year. And as you'd expect, dominated by M&A rather than IPO. Most of the IPOs were relatively small and many of them were in Asia where the IPO markets have really remained robust. But in terms of contribution to returns, the M&A is more important on a kind of typical basis. If you look at the top right here, nearly 90% of the transaction is M&A and actually an even split across buyout and venture in that category. So we're seeing rather than venture companies IPOing, they're choosing to remain private, either being purchased by another private equity manager or they're being purchased by larger corporates, which can often themselves be listed, but they're not choosing to IPO. On the bottom left-hand slide, a few examples of the types of companies, just the top five by contribution to NAV per share. And you'll see a diverse group here from across the three different regions. There's a venture company, Scale AI, that saw some investment from meta platforms, so $14 billion injected into that business. But we've seen some more mature buyer deals as well. There's IFS, which is an enterprise software business based in Sweden, saw an injection of capital, adding $0.08 to NAV per share. And then moving across to the buyout component, we saw most notably Figma, which added 86 cents to the NAVPA share as of the financial half year end. So that business, if you're not familiar, is effectively a graphic design company. facility that is akin to the PDF of the graphic design world. And indeed Adobe did launch a bid for that company a couple of years ago, which was effectively blocked by the competition authorities in the US. So Figma then IPO'd on the 31st of July, which happened to be the day of our financial year end. So that was a very successful debut. We've also interestingly seen a buyout transaction where Virgin Australia that was taken private by Bain Capital a few years ago, they turned it around, so returned the business to profitability, and they've just IPO'd again on the Australian market. So a real success for a private equity manager there. So a very important slide, I'll just take a sip of water before this one. This is a really, I think, instructive case for the conservatism in our NAV. So we've been performing this analysis since 2012. And essentially what we're showing here is each of these bars is specific to that that year in question. So in 2012, we are looking at all the exits we've made. all the transactions in the portfolio, where we've established a valuation independently of the private equity manager. So rather than just relying on the manager to continually revalue, these uplifts that we're showing here are evidence of a premium that is being applied when those businesses either IPO or are subject to M&A or some other transaction where an external buyer is looking to acquire the business. And so typically those premiums have run between 30 and 50%. If you look at the kind of 2012 through 2019 bars, we did see an exceptional period through 2020, 21 and 22 with some very strong IPOs driving those numbers higher. But post 2022, we've still seen significant premier on exit of the order of 30% on average. And in the half year just ended, that figure was 53%. Now I should stress, normally we don't break these down because they're based on a large number of transactions and there is no single transaction that really dominates or drives the number. This half year is an exception because Figma's IPO, which I mentioned happened on the final day of our half year period, Figma's IPO was so successful, it alone added 30 percentage points to that uplift number. So if we strip out Figma, the remaining population of companies that exited in the first half added 20 percent to their valuations, essentially through through the exit. And if we were to add back Figma at its current share price, which has come down post 31st of July, the uplift would be 30 percent. So hopefully that's not confusing. But essentially, Figma has made an outsized contribution on the day of its IPO. It really tripled in value on the day. It has given back some of those gains. So I just wanted to be 100% transparent that that 53 was a moment in time in that particular case. The majority of our figures here were spread across a large number of companies and fairly evenly. So I'm conscious of time. I'll get to the end for some questions for the last 10 minutes. Before that, I'll just cover the vintage profile. And I think reassuringly, we continue to see the vintage allocations at very balanced levels. So this is something that we monitor carefully. We have a policy of trying to deploy capital very evenly. not chasing performance in good years or pulling back too far in the bad years. And we've proven that that is, generally speaking, the best way to optimize returns in a private equity portfolio. It's very difficult to predict the outcome of a vintage 10 years ahead, essentially. And so we try to invest steadily over time. And you'll see the largest single vintage year exposure is 13%. So across the orange bars, which are the most recent period that the half year end, we saw 2021 and 2022 vintages in equal position at 13%. So these these figures effectively provide some reassurance that we have not overinvested in what could turn out to have been a peak valuation environment. And similarly, we're investing in a very balanced way today. You'll see 2023 and 24 are somewhat lower. They do tend to. increase over time because the secondary funds effectively backfill the vintage exposure as we go through. So we should expect those to increase as we go forward. Then some insight into the portfolio and how it's trading. We've seen a 13% rolling 12-month gain in revenue across the sample that we use of the portfolio. It's not 100%, unfortunately, due to data limitations. It is 60% of now, so it's growing as a sample. So I think these figures are quite meaningful. We then have nearly 18% growth in EBITDA, again, on a rolling 12-month basis to the end of June. So indicative of margin enhancement and clearly a strong buildup of value in the portfolio that hopefully we'll see come through in valuations. And two thirds of the companies in the sample were growing EBITDA. So it's a broad kind of contribution to that 18 percent figure. And of those two thirds, again, we're growing at a rapid pace. So more than 10 percent in the period. So effectively, just under half of the portfolio driving that EBITDA growth with figures of more than 10 percent. And in terms of balance sheet, the same sample, we have an average debt multiple of 4.4 times EBITDA. So a measure of gearing in the underlying companies, which compares well with typical private equity deals we're seeing in the market, which can be as much as six or even eight times EBITDA. So we have a very well-balanced conservative portfolio in that respect. And I should stress that in the 60% sample, the majority, the vast majority of those companies are buyouts. So the venture and growth equity names where we see typically lower levels of gearing are not represented in that figure. So the true look through is almost certainly lower than the 4.4. And then turning to valuation multiple, 14.9 times, again, multiple of EBITDA, compares very well with the public markets. So a global public market index is typically 17 to 18 times. And there are some real differences by sector that we showed at the full year, notably technology, where our investments tend to be valued at lower levels than the public markets. And so I'll finish on this slide and perhaps just leave this on the screen. Of the largest 25 companies, we currently have eight that have either just gone through a liquidity event, such as a sale or an IPO, or are imminently expected to do so. So I'll very quickly go through them. Figma, I told you, has IPO'd already. So it's worth keeping an eye on that share price. We do still hold shares. Shein, the fashion business, is exploring IPO options. It's been a protracted process, but we do believe they'll get there. Wiz has been acquired by Google for $32 billion, so number six there. Frenary, which is an ice cream business, has gone through a continuation fund transaction with Goldman Sachs and Adir, the Abu Dhabi Investment Authority, investing new capital, providing an exit for existing shareholders, or LP, sorry, including HarbourVest funds. So we'll see some liquidity from that deal. Databricks is going through a funding round with a valuation of north of $100 billion. Revolut also going through a funding round with a valuation of $75 billion. Scale AI received the investment from Meta over the summer. And Assured Partners in the US has been purchased by a larger peer in the market. So that's a traditional M&A deal. So just in the top 25 companies, we're seeing significant activity. in different regions, different sectors, and the top 25 is fairly significant at 14% of NAV, so we should see some liquidity come back. On that note, I'll pause and perhaps hand over to Stephanie if we have any questions.

That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our investor dashboard. Stephanie, can I please hand back to you to share the Q&A and I'll pick up from you at the end.

Great. Thank you very much. Well, we have a number of questions. So thank you all so much for for sending them through. We'll try and get through as much as possible. First question here, which I might put to you, Richard, is on the SMA. So it's from Stuart. When the SMA is fully implemented, shareholders' investments will be materially less geared than in previous times. By how much do you think this might reduce future returns? And or how much value did the gearing contribute to returns in the past?

Thank you for the question. That's quite a challenging one to answer, I must say, because clearly the gearing works in both directions. It's also, it hasn't been an intentional part of our investment policy. So we haven't borrowed money. deliberately to try to enhance returns. It's more due to working capital requirements, being a closed-end fund, making commitments to funds with a very long cash flow duration. So we've seen from 2022 until very recently, we've seen negative cash flow because the capital calls from the commitments we already have have effectively outweighed the distributions we've been receiving from the older investments, the older funds. So the credit facility at the HVP level is used to bridge the gap there rather than as a deliberate kind of gearing tool. And similarly at the HarbourVest fund level, those facilities are subscription lines that are used to smooth cash flows to investors rather than, again, to pursue gearing. And actually, through the company's history, we've had a range of different kind of situations, really, that the level of gearing has cycled from positive to negative. So we've had periods of net cash most recently back in 2019 and going into Covid, but also in 2021 when we had a very strong year of distributions. So it's I would say. What we're trying to do at all times is maintain over the long run a neutral cash flow position. So we aim to be in a position where we have very little borrowing and as little cash as possible to avoid cash drag. So that's really what we'll continue to do with the SMA. The SMA will make that easier to achieve because the cash flows will be more predictable over shorter periods of time. So yeah. we should find it much easier to balance the capital calls and distributions going forward.

Thank you, Richard. Got a question here from Andrew. Ed, I might put this to you in the first instance. For retail investors who like to have prime equity in their portfolios, but might be nervous about HVP on a number of fronts, how would you counter any nervousness about the high level exposure you have to the US and also the lack of see-through to underlying companies through being a fund of funds.

I think the latter is our strength rather than a weakness because in buying HVPE you have effectively a one-stop shop exposure to the best managers of private markets investments that the world has to offer. and we aren't beholden to the performance of any individual company to make or break the returns that HVPE delivers for you. So it's a sort of bellwether portfolio that should have over time a much smoother net asset value growth than a company which had a very concentrated portfolio of shares or exposures. So you sort of pay your money, it takes your choice. This for us is the one share you need own to gain exposure to the best managers in private markets worldwide. As to the United States, yeah, i'm not sure you know how many years you've been invested in the market i've been invested in for far too long hence the gray hairs but um if i had a pound for every time someone had said to me the us was peaked um you really need to diversify away from it um i'd be a very wealthy man and um the us has continued over the very long term to deliver innovation, which has driven growth and dynamism, which has driven growth, which has put Europe to shame. Asia comes and goes, but the United States continues to generate new companies with new ideas that end up being transformative. And for us, it's important that we capture that with a significant exposure to the United States. It's a distinguishing feature of the company, just as our venture exposure distinguishes us from other peers. And again, if you want over the long term, it's a long term investment proposition to have exposure to that innovation and the way that innovation turns into profitable growth, then this is the company for you.

Thank you, Ed. That's great. I've got another question here from from Jeff, I'm gonna put this to you, Richard, about our total expense ratio. Do you expect the TER to reduce next year?

So thank you for the question. It's always difficult to give forward-looking statements. What I would point out is that the main reason for the increase in the TER recently is the increased utilization of the credit facility. So the fact we're drawn by $600 million on that line, Clearly, we're paying the spread, which is 350 bits over SOFA on that facility. And we have a five-year committed line that was set up in June 2024, so it expires in June of 29. We do have a policy of renewing the facility well ahead of expiry. So while I can't give any concrete figures here, I would... hope and expect we can reduce the cost of that facility over time even without you know even like for like in terms of the level of drawing but certainly with cash flow turning positive as it has done in the period up to September this year at the portfolio level we should see a gradual repayment over time of the of the drawn balance which will further reduce the the TER so aside from the credit facility there's been no other kind of contributor to an increase. So we continue to find efficiencies in other aspects of the way we run the fund.

Thank you, Richard. I've got another question here from Andrew. Why is everything in US dollars and not pounds? Is this not a perpetual barrier for potential UK investors?

Yes. So thank you for the question. This does come up now and again. Our functional currency is the US dollar. We're managed by a US firm. The majority of the portfolio is denominated in US dollars. So really that's the real currency of the fund. We have 80% of our partnerships in US dollars, for example. So I appreciate, though, it can cause confusion given we have a sterling share price and 70% of our shareholders are UK. So we will take the feedback on board. You're certainly not the first to mention this. We hesitate a little bit because expressing everything in both currencies can be quite confusing as well. But point taken, we'll have a discussion internally in terms of how we present going forward.

Thanks, Richard. I've got a question here on AI from Stuart. AI appears to have come on the scene at a very rapid rate. Have your managers had time to make shrewd investments in the area to any great extent?

uh certainly they have um i mean we it's it's difficult to cite kind of the examples that are emerging because you know clearly none of us would recognize the names at this this point but we are backing you know the the most successful venture managers historically uh index ventures you know based in europe they're one of the top names in in the industry and they are generally well ahead of the curve i mean they They were investing in mobile payment firms on smartphones back in 2009 when hardly any of us had a smartphone. So they're generally well ahead. We've seen, you know, I've got the top 25 slide on the screen here. We've seen A.I. contribute to several of these positions already. So with the one I mentioned that's been acquired by Google. That is an AI based business. So it's cloud infrastructure for enterprises and it uses AI in its kind of back end. We're seeing Databricks adopt AI. That's another cloud platform. It helps organizations leverage their own data. So it provides a platform for them to upload their own information. And then there are very sophisticated tools that allow that business to add value in terms of analysis of the data. And then scale AI, most obviously number 16, where we've seen that injection of capital from Meta that they took a 49% stake, clearly because they value the assets there. They value the intellectual property and the individuals, I would imagine, who are in the business. So we are seeing concrete examples of value add where we're, you know, there is an undeniable increase in the value of those businesses and they are making a contribution to the economy. So I would say yes to that question. And there's likely much more of that at a less mature stage in the portfolio.

Thank you, Richard. Conscious of time, I'm going to try and combine a few questions that we've had on the US stock market before we wrap up. Um, obviously, uh, HVP has significant exposure to the US and the US equity market is most expensive ever. What effect would decline or a reduction in valuations have on HVP?

Yeah, sure. It's an important question. So I'll take that kind of two levels. I mean, firstly, the US public market clearly leads the way globally. So I think If the US were to see a meaningful correction, it's difficult to see other markets avoiding that. so it'll be a global event i would imagine so through a direct impact on the share price of course it would impact hvpe i mean it's very unlikely we would escape um you know such a such an event but in terms of the portfolio that's where the effect might be more nuanced because we do tend to see a cushioning effect on the downside with private equity valuations now i mentioned earlier We've lagged the public markets to some extent on the way up in the last 18 months because managers are reluctant to take the full benefit of valuation enhancements that they could easily make. They could track the public markets more closely. But they choose to leave more of a buffer there so they don't disappoint their investors, who are mostly institutional investors, pension funds, sovereign wealth funds and so on, when they sell those businesses. So imagine you're a private equity manager. You've made a successful investment. The company is valued at 2.5 times your original investment amount and you see comparable public companies, they're trading at levels that would allow you to write that up to three and a half times, say. And if you did that, perhaps you would then realize the investment at three times less than the unrealized value and then disappoint your investors. Whereas if you hold it at 2.5, you have an uplift on exit. So that's the kind of psychology of the private market. So there tends to be a buffer, as I've kind of illustrated with the realized uplifts. And I would stress that the shares are still trading at a 30% discount. So if you're looking for value in the kind of areas that the public market is becoming ever more enthusiastic about, this could be a good option on a risk-adjusted basis. Clearly there are still risks. I would always point that out. And there is volatility in our shares, but there is also relative value.

Thank you, Richard. That's great. Thank you, everyone, so much for all of your questions. Unfortunately, we haven't had time for all of them, but I hope you have enjoyed the presentation today and we very much hope to see you next time.

That's great. Thank you all for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and I'm sure be greatly valued by the company. On behalf of the management team of Harbour Vest Global Private Equity Limited, we'd like to thank you for attending today's presentation and good afternoon to you all.