SVG Capital raises £220m for investment

The quoted private equity investor sees opportunities ahead and has prepared its balance sheet in anticipation of slowing returns.

SVG Capital, Permira’s largest investor, has raised £120 million ($233.7 million; €151.3 million) from selling a convertible bond. The firm has also completed the sale of £100 million of private equity fund interests to Lexington Partners, a US secondaries firm, and one of SVG’s own fund of funds.

Nicholas Ferguson:
raises £120m bond

SVG had initially planned to raise £100 million from the convertible, which was handled by JPMorgan Cazenove.

Nick Ferguson, SVG’s chairman, said the bond sale and the secondary divestment added to the company’s liquid resource. He said the firm has about £800 million of cash on its balance sheet from £250 million of loan notes issued in the previous two years and a €750 million unused credit facility from Royal Bank of Scotland.

Ferguson told PEO: “Over the next 18 months to two years we see a number of opportunities likely to come up and we needed to ensure we had the resources and liquidity.”

“We have also substantiated the value of our assets securing a premium in the secondary sales, in contrast to the public market, where you can buy Permira by buying SVG at a 24 percent discount to net asset value,” he said.

Lexington Partners paid £81.6 million for 80 percent of the fund interests being sold, including SV Life Sciences Fund II, SV Investments Fund I, Permira Europe II, SV Life Sciences Fund III, Permira Europe III and Permira IV.

SVG Diamond Private Equity Holdings III, one of SVG’s structured products, bought the remaining 20 percent for £20.8 million.

Ferguson said he expected to see slower distributions from Permira’s investments and the extra liquidity would allow the company to fund investments and to finance new products in the pipeline.

He said he expected to see a slowdown in fundraising as investors dealt with falling equity portfolios and their effective allocations to private equity rose. “In rising markets investors have to invest more in private equity to keep up.”