HarbourVest ups ante, offers to buy SVG’s whole portfolio

In an effort to trump a £748m preliminary agreement SVG reached with rival suitors Goldman Sachs and CPPIB, HarbourVest has also offered to buy the London-listed private equity investor's entire portfolio, but for at least £783.1m.

The battle for SVG Capital has taken a new turn, as HarbourVest said on Monday it is prepared to make an offer to acquire 100 percent of the London-listed private equity investor’s portfolio for at least £783.1 million ($972.09; €870.35), representing a premium of some 4.7 percent to the £748 million offered by two other suitors.

On September 12, SVG became the target of a £1 billion, 650 pence-a-share unsolicited bid from HarbourVest. The offer was full and final, meaning it cannot be raised under the City Code, but then on 6 October – the deadline HarbourVest had set for SVG shareholders to accept its offer to buy the company – SVG announced it had reached a preliminary agreement to sell its entire portfolio for about £748 million to two other suitors: AIMS Group, the alternative investments unit of Goldman Sachs, and the Canada Pension Plan Investment Board.

SVG said the offer from Goldman Sachs and CPPIB represents an aggregate value per share of 680 pence, and added that it plans to return some £1,064 million to shareholders through a series of tender offers as the company is wound up.

However, early on Monday, HarbourVest made a fresh overture, saying its new offer of at least £783.1 million for all of SVG's assets would allow the private equity investor to return “in excess of 700 pence per share to shareholders”, or about 2.9 percent more than the Goldman Sachs/CPPIB proposal, taking into account wind-down costs, cash balances, and aggregate break fees.

Under UK Takeover Panel rules, a full and final offer for a company cannot be raised. However, this no-increase rule does not restrict the price a bidder can offer for the assets of a company.

Since HarbourVest's offer to buy SVG’s whole portfolio would not be subject to due diligence, the time taken to complete the transaction is expected to take no longer than the timing proposed by Goldman Sachs and CPPIB, the Boston-based investment firm said.

“HarbourVest expects [SVG's] board will be keen to explore this asset proposal given the clear value uplift it represents to shareholders,” the firm said in a statement.

In line with the Goldman Sachs/CPPIB proposal, HarbourVest said its asset purchase offer would be conditional on the lapsing of its 650 pence-a-share cash offer for all of the ordinary share capital of SVG.

“There can be no certainty that such asset proposal will be effected or as to its terms,” HarbourVest said.

HarbourVest's new offer follows an earlier announcement on 8 October that the firm is willing to propose an asset purchase transaction “structured in line” with the proposal from Goldman Sachs and CPPIB, but no financial details were provided. The latest statement, which does contain details about pricing, was released to the market at 1018 BST on Monday.

“HarbourVest must be kicking themselves that they did not simply offer 675 pence per share initially,” analyst Tom Skinner at Fidante wrote in a research note sent out early this morning, before HarbourVest's statement was released. “Nevertheless, the board needs to deliver the maximum value for shareholders and, for the right price, may still deliver the portfolio to HarbourVest.”

Spokesmen for SVG and CPPIB declined to comment on HarbourVest's new proposal. No one at Goldman Sachs could be reached at the time PEI went to press.

SVG shares were up 3.1 percent at 689.50 pence by 1128 BST on Monday.

Updated to include analyst comment and an explanation of UK Takeover Panel rules.