Hours before a key deadline on Thursday, SVG Capital said it had agreed “in principle” to sell its entire portfolio to Goldman Sachs and the Canada Pension Plan Investment Board, setting aside an earlier deal with another group of bidders.
SVG is the target of a £1 billion ($1.3 billion; €1.2 billion) unsolicited bid from HarbourVest, whose 650 pence a share offer is due to expire at 1pm UK time on Thursday.
After the market close on Tuesday, SVG had revealed a preliminary deal to sell 50 percent of its assets to Pomona Capital and Pantheon Ventures, and planned to return the cash to shareholders in separate tender offers.
But early on Thursday, SVG’s board said it was setting aside the earlier agreement with Pomona and Pantheon, because it had agreed the “key commercial terms” of a sale to the alternative investments arm of Goldman Sachs Asset Management – the Alternative Investments and Manager Selection Group – and CPPIB for about £748 million.
That represents a 6.8 percent discount to the value of its total investment portfolio as at 31 July 2016, which is £802 million, SVG said.
Counting its current net cash, and net of all estimated costs, the offer translates into an aggregate value per share of 680 pence, the company added.
Assuming the sale goes ahead, SVG plans to return about £1,064 million to shareholders through a series of tender offers as the company is wound up. These offers are expected to proceed as follows:
•A £450 million tender offer before year-end at 680 pence a share
•A £300 million tender offer in January or February 2017 at 680 pence a share
•A £270 million tender offer in March 2017 at 680 pence a share
A final capital distribution is expected to take place in the second quarter of 2017.
“The board believes the sale of the entire investment portfolio and wind down of the company will generate superior value when compared with the final 650 pence a share cash offer from HarbourVest…and will deliver greater certainty for shareholders when compared with the previously proposed sale of 50 percent of the portfolio to Pomona Capital and Pantheon Ventures,” SVG said in a statement.
SVG's latest proposal “gives shareholders three tenders at 680 pence by the end of Q1 2017 and a final distribution in Q2 2017. Therefore we think this is now the finale for SVG,” analyst Iain Scouller at Stifel said in a research note.
Myrto Charamis, an analyst in the alternative funds team at Liberum, said in her note: “This is an offer directly comparable to HarbourVest's 650 pence per share offer. It is straightforward and specific in terms of distribution dates and per share price although it is still subject to due diligence.”
The proposed distribution of 680 pence represents a “4.6 percent premium to the HarbourVest offer, and we believe it is the most favourable offer for SVG Capital shareholders after considering the additional risks and timing involved”, Charamis wrote.
The sale to Goldman and CPPIB is subject to the offer from HarbourVest lapsing or being withdrawn and shareholder approval, SVG said, noting that “there can be no certainty” regarding the proposed sale or its terms.
SVG shares were 0.75 percent lower at 665.50 pence in early morning trading.