SVG in €400m funds securitisation

London-based listed fund investors SVG Capital is marketing a €400 million collateralised debt obligation secured against primary and secondary investments in private equity funds.

SVG Capital, the London-based private equity fund investment specialist listed on the London Stock Exchange, is currently marketing SVG Diamond Private Equity Plc, a €400 million portfolio of rated bonds backed by private equity fund investments.

Proceeds from the transaction will be invested in approximately 40 individual private equity and venture capital funds, denominated in either dollars or euros and managed by at least 20 different fund managers. About 50 percent of the collateral will be primary funds, with the balance going into secondaries. 

The so-called collateralised fund obligation, or CFO, is aimed at international institutions investing in fixed interest securities. Rating agencies FitchRatings, Moody’s Investor Service and Standard & Poor’s have published presale reports on the deal.

Fitch has given the most senior, or ‘A’, tranche of the bonds, which accounts for €85 million, an expected AAA rating. The more junior B, C and M strips, accounting for €170 million between them, are rated AA, A and BBB, respectively. €140 million worth of preferred shares are not rated.

Normura, the investment bank, is arranging the deal. According to Fitch, the transaction is expected to close in September.

News of the deal was reported earlier today by Bloomberg.

Debt obligations secured against cash flows coming out of private equity funds are rare, although a small number of issuers including Swiss fund of funds manager Partners Group, Deutsche Bank and AIG have completed similar transaction. 

SVG, formerly known as Schroder Ventures International Investment Trust Plc, manages over $1 billion of capital dedicated to private equity. The group is the largest institutional investor in primary funds managed by London-based Permira, one of Europe’s leading buyout investors.