SVG Capital, a UK-listed fund of funds with mainly exposure to buyout firm Permira, has improved its net asset value by 13 percent in the first three months of the year.
The total return on the investment portfolio also grew by 15 percent, according to an SVG interim management statement.
The performance was mainly driven by Permira's fourth buyout fund, which saw a significant uplift in value of the quoted portfolio. The valuations of Hugo Boss and Freescale increased by £63 million, ProSiebenSat’s valuation rose by £31 million. The value of Arysta Life Science increased by £22 million. The average net multiple used to value the portfolio increased by 7 percent to 9.8x.
Lynn Fordham, SVG’s chief executive, said the results were “positive”. “It’s a continued strong performance and we are positive on the outlook,” she told Private Equity International.
During the first quarter, SVG Capital also made a €100 million commitment to the Fifth Cinven Fund, which closed on €5 billion in March. SVG also made a commitment to Permira V, which reached a €2.2 billion first close this week. Uncalled commitments at 31 March 2013 stood at £180 million which rose to £264.6 million following the commitment to Permira V. Following the recently announced £65 million tender offer, SVG has available liquidity of £349.8 million.
We will pick a small selection of GPs who we will partner with over the years and the size and commitment is driven by the liquidity of the balance sheet at any point in time
At 31 March 2013, SVG Capital had cash balances of £298.9 million and gross borrowings of £251.7 million. The net cash position was £47.6 million.
Distributions significantly outweighed calls in the first quarter, with £28.5 million of distributions received and £1.6 million of calls paid. SVG has received an additional £17.6 million of distributions from Marazzi and TDC.
“SVG is committed to maximising long term shareholder value through a focus on both NAV growth and total shareholder return. We have made significant progress against each of these commitments, with double digit growth in NAV per share in the first quarter and the announcement of two new investment commitments, which will begin to drive returns beyond the current investment portfolio,” the firm said.
In April last year SVG’s shareholders agreed the firm’s strategic overhaul to diversify and invest beyond the Permira funds. Last October SVG sold its LP interest in Permira III as part of this change in strategy. SVG will make further new investments in 2013, Fordham said.
“We will pick a small selection of GPs who we will partner with over the years and the size and commitment is driven by the liquidity of the balance sheet at any point in time,” Fordham said. In total, the firm will back five or six managers of buyout funds in Europe and the US, she added.
SVG has also targeted a further £300 million capital return programme over the next three years. “It will be combination of buybacks, tenders and dividends. We already have been in the market buying back shares; we have bought about 8.5 million, 9 million shares since the 31st of March,” Fordham said.
Additionally, the sale of 50.1 percent of its private equity fund management business to Aberdeen Asset Management, which was announced in February, has been approved by the UK’s Financial Conduct Authority (FCA), and is set to complete in May 2013. The sale is expected to add a minimum of 13.7 pence per share to the company’s NAV.