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SVG launches second recovery vehicle

The Strategic Recovery Fund, an SVG Capital vehicle applying private equity techniques to public companies, is fully invested. The firm has now begun marketing for a larger second fund.

SVG Advisers, the fund advisory arm of listed UK investment group SVG Capital, has announced that its Strategic Recovery Fund (SRF) is now fully invested with a current net IRR of 45.6 percent.
 
SRF was closed with £15 million (€22 million; $28 million) of commitments in January 2004. The vehicle invests in public companies using what SVG refers to as “private equity techniques”, including utilising in-depth deal sourcing and evaluation and input from experienced industrialists.
 

Steiner: public equity product better understood now

The fund has made six investments, of which two have been fully realised: promotional products business 4imprint, which was sold in April 2005 for £2.7 million, generating a money multiple of 1.8 times investment cost; and Wyndeham Press, a Luton-based publishing business, which was fully exited, after one partial realisation, in February 2005 with total proceeds of £1.2 million, a 1.3x multiple.
 
The current portfolio comprises: Moneybox, an operator of automated teller machines; Elementis, a chemicals company focused on pigments, chromium and rubber; Volex, a cable and related products manufacturer; and Hampson Industries, an aerospace and automotive engineering business, which was partially realised in 2005, generating proceeds of £1.3 million, a multiple of 1.6x investment cost.
 
The marketing for successor fund, Strategic Recovery Fund II (SRFII), has now begun with a target of between £80 million and £100 million, which will bring total assets under management for SVG’s public equity team to approximately £400 million.
 
Adam Steiner, head of research, public equities at SVG Capital, told PEO that the LP base for SRF was largely made up of high net worth individuals, UK private banks, US strategic investors and a commitment from SVG Capital itself. “The big difference this time around is that this product is a bit better understood,” said Steiner. “Virtually everyone who invested in the the first fund is reinvesting second time around, but we’ll also be looking for strategic investors.”
 
In the run-up to the new fundraising, two new hires have been made to the SVG public equity team in London, bringing the total number of investment professionals to seven.
 
Oksana Yesina, formerly at PricewaterhouseCoopers in the banking and capital markets team and most recently an executive in the private equity team, has joined as an analyst. Stuart Widdowson, previously an associate director at HgCapital, will join in July as a fund manager.