SVG Capital sells remaining stake in JV to Aberdeen

The deal comes two years after SVG and Aberdeen created the new fund of funds business

Aberdeen Asset Management has agreed to buy SVG Capital’s remaining stake in their joint venture vehicle, Aberdeen SVG Private Equity, for £29 million.

As part of the transaction, SVG Capital will receive its share of dividends and capital distributions pre-closing, which are expected to take total cash proceeds to approximately £41 million, in line with the most recently published valuation of the business and consistent with the original transaction entered into in May 2013.

In May 2013, the two groups created a new fund of funds business when London-listed SVG Capital agreed to sell a 50.1 percent stake in SVG Advisers (SVGA), a subsidiary of the firm with various funds, to Aberdeen Asset Management for £17.5 million (€20.4 million, $27 million). The business was then named Aberdeen SVG Private Equity. As part of the deal, Aberdeen had the option to buy the remaining 49.9 percent stake for a minimum price of £20 million and a maximum price of £35 million.

The transaction, which is subject to regulatory approval, is part of Aberdeen’s strategy to consolidate and further strengthen its alternatives platform which provides multi-manager coverage of hedge funds, property and private equity allocations, infrastructure investments and pan-alternative capabilities, the group said in a statement.

The majority of the Aberdeen SVG Private Equity team will be fully integrated into Aberdeen’s private equity team, led by Graham McDonald. The combined team of over 20 investment professionals will oversee total assets under management of £6 billion.

“The purchase of the minority stake is a natural progression for Aberdeen in establishing a truly global PE franchise as we look to build on the established foundations of our alternatives platform. Institutional investors are increasingly looking towards alternative asset classes, with access to private markets being a key element of diversifying their portfolios and enhancing returns,” Andrew McCaffery, global head of Alternatives at Aberdeen Asset Management, said in the statement.

Following completion, the investment management contract for SVG Capital will be transferred to an entity wholly owned by SVG Capital, along with the SVG Capital investment and management team, including Lynn Fordham, CEO of SVG Capital. This will ensure that the SVG Capital team will be able to continue to focus fully on implementing SVG Capital's investment strategy and their interests are wholly aligned with SVG Capital's shareholders. The management fee of 0.5 percent of gross assets will remain unchanged.

“This agreement completes the process we started with Aberdeen in 2013. The sale crystallises value for our shareholders and aligns the management team wholly with SVG Capital shareholders as we grow our portfolio of fund and co-investments,” Lynn Fordham, chief executive officer of SVG Capital, said in a statement.