Event-driven hedge fund Polygon has increased its long position in London-listed SVG Capital via contracts for difference as speculation mounts over the possible emergence of alternative bidders to SVG’s much bigger US rival, HarbourVest.
Contracts for difference or CFDs enable traders to make bets on the direction a particular security might move in, and then profit from the difference.
Polygon favours “hostile, cross-border or otherwise complex transactions more likely to be misunderstood by the market” in M&A, according to its website.
SVG, the target of a £1.015 billion ($1.3 billion; €1.2 billion) unsolicited bid from HarbourVest, said in its interim results on 16 September that it had received approaches from a number of credible parties, paving the way for a possible bid pitched higher than HarbourVest’s offer of 650 pence a share. The firm has not named these parties, but media speculation has focused on several private equity asset managers in particular, which are thought to possess the financial firepower and the specialist sector expertise needed to acquire a business as complex as SVG's.
For example, The Sunday Telegraph reported on 25 September that as many as six potential bidders for SVG have emerged, citing sources. According to the newspaper, these possible bidders could include Amsterdam-based private equity investor AlpInvest, which has €39 billion in assets under management and is a unit of buyout giant the Carlyle Group; Carlyle's own peers, Blackstone ($356 billion in AUM) and KKR ($131 billion in AUM); and New York-based Lexington Partners, the world's largest manager of secondaries and co-investment funds, with more than $34 billion in committed capital.
Polygon now holds interests in SVG via derivatives equivalent to just over 1 percent of the firm’s stock, the filings dated 27 and 28 September show. Based on the latest filing with the London Stock Exchange, it stands to benefit from an SVG share price of more than 664.877 pence. SVG shares traded at 667.50 pence early Wednesday.
A spokesman for Polygon declined to comment on its trades.
Now that HarbourVest has issued its offer document, under the City Code on Takeovers and Mergers, SVG has until tomorrow, Thursday, to publish its defence.
-Updated to include data from a regulatory filing dated 28 September.