Steve Belgrad

Boston-based asset manager HarbourVest listed its first public vehicle, HarbourVest Global Private Equity Limited (HVPE), on Euronext Amsterdam in December 2007. This September, the firm appointed Steve Belgrad of Affiliated Managers Group as HVPE's chief financial officer. Jennifer Harris spoke with Steve about the challenges of running a listed vehicle in today's turbulent markets.

John had been one of the drivers of putting together a publicly listed vehicle, and so when HVPE was launched, he acted as CFO initially while the firm was looking for a permanent CFO, but it was always the intention that he would go back to his day job of being one of the key executives in our secondary area. If you look at the way HVPE was formed, a significant amount of the assets came from existing HarbourVest investors exchanging their HarbourVest fund units for shares of HVPE. And so in a way it was very much like assembling a secondary portfolio of HarbourVest interests, and it tied in very nicely with John's expertise. It made a lot of sense for him to be involved in the project, as well as to lead it from a CFO perspective initially, but it was always meant to be a temporary position for him.

I've been focused on asset management over the last ten years, but certainly the private equity fund of funds space is a new sector for me. So learning that sector, as well as the HarbourVest organisation, has been a challenge. If you compound that with the volatility of the markets over the last few weeks that's added even more intensity to the job. One of our providers of D&O insurance is AIG, so one day we're looking at the implications of AIG facing challenges. Our credit facility is provided by Bank of Scotland, so the next day we're looking at volatility in HBOS' stock price and the takeover of HBOS by Lloyds TSB. Before that, we were trying to go through the portfolio and assess any exposure to Lehman Brothers. You come in every morning and your day is filled with things you didn't think you'd have to deal with when you got up that day.

It's less of a traditional CFO role and more of a business management role. Within HVPE, it's really helping to manage that entire business, everything from investor relations to the finance areas, but also trying to find opportunities to grow the business in a way that is beneficial to the existing shareholders. Likewise there are investor relations issues in terms of increasing liquidity and trying to get the share price to be as close as possible to net asset value, and also trying to evaluate what the mix of the portfolio should be and looking at new investment opportunities within the HarbourVest family. While HVPE is currently invested in 20 HarbourVest funds, there are 538 underlying fund interests and over 5,600 underlying companies. Therefore, HarbourVest has quite a bit of infrastructure which supports the finance activities of HVPE, including calculating the NAV and treasury functions, so I have to spend less time on those issues and I can spend more time focused on the business-oriented issues of HVPE.

While HarbourVest has been around for 26 years and is the largest and oldest private equity fund of funds organization globally, in many ways it's been a very private company and may not be as well known outside of its core institutional base. And so HVPE really does represent the first window out into the public markets for a private partnership like HarbourVest. I think part of the challenge over the next year is going to be identifying the pockets of potential investors in HVPE and going out and telling the HVPE story and the HarbourVest story, which I think a lot of people may not be familiar with. We also intend to hire an IR person based in London. Given that I'm based in Boston, it's useful to have somebody based in the same time zone as where the investors are. I obviously will continue to have a lot of direct contact with the existing shareholders, but I think there's a whole other level of activity that we have to begin to do to identify and go out and tell the story to potential new investors. And that's where I think it'll be very useful to have an IR person who can be based in London and meet with potential investors on an ongoing basis.