SVG Capital saw strong realisations in its portfolio during the third quarter due to the buoyant exit climate, it said in a statement.
So far this year, the London-listed trust has seen distributions of £197 million. Of that, it received £105 million in July, largely due to the recapitalisation of Permira-backed Hugo Boss.
“Since September 2014, Permira has continued to realise investments and we expect to complete the return of £470 million to shareholders by the end of the first quarter of 2015,” SVG said.
Since the quarter end, SVG Capital has received a further £5 million of distributions and received call notices of £7 million. Since September, £218 million of realisations have been announced, primarily from the partial realisation of Arysta LifeScience and the recapitalisation of Red & Black, the investment holding company for Hugo Boss. SVG expects to receive the majority of these proceeds in the first quarter of 2015.
Distributions outstripped capital calls, which totalled £73 million during the period. This funded 10 investments, including two co-investments, TeamViewer and Visma.
SVG’s investment strategy “is building momentum”, the trust said, adding that it now has commitments to four leading private equity managers. “The transition to post-2012 investments continues to gather pace, with those investments now representing around 17 percent of the portfolio,” it added.
“In the short to medium term, we expect the composition of the investment portfolio to continue to evolve from Permira-focused to a more diversified portfolio, and we have visibility on a pipeline of further investment opportunities. There is a good mix of both private equity fund and direct investors in the team that manages the portfolio and resource will continue to be added as required,” SVG said.
SVG has been adjusting its investment strategy in recent years after shareholders voted for a diversification push in 2012. Instead of only backing Permira, SVG said it would expand the number of its GP relationships. The new strategy is “really starting to gather pace,” Lynn Fordham, SVG’s chief executive told PEI in August.
Earlier this year, SVG made a $150 million commitment to CCMP Capital’s third fund, which focuses on mid-market buyouts and growth capital investments in the US and Europe. The firm aims to back approximately eight European or US-focused GPs in total, Fordham said.
“We don’t have a target of how much we want to put to work in one year. If a manager we want to commit to isn’t fundraising for another 18 months, then we will wait 18 months for that manager. Private equity is all about backing the best managers to generate the real outperformance of the market.”
SVG recorded a net asset value per share of 521p, down 2.6% from 535p is August. The “positive movements” in the valuation of the unquoted portfolio were partially offset by the decline in value of the quoted companies and foreign exchange movements, SVG said.
At 12.00 BST, SVG shares were trading at 407.6p, up 0.72 percent, giving the trust a market cap of £838.06 million.