SVG writes down three investments to zero

The listed Permira investor, which is now 20%-owned by Coller Capital, saw two-thirds of the book value wiped off its portfolio during 2008. Chief executive Andrew Williams has stepped down.

SVG Capital, the London-listed investor in Permira’s funds, has valued its stakes in three Permira portfolio companies as worthless. German television operator ProsiebenSat.1, UK gaming business Gala Coral and Hungarian chemical producer BorsodChem are all being held at zero under mark-to-market accounting practices.

The portfolio companies’ valuations have been affected by a combination of falling comparable public multiples and softening earnings, said Lynn Fordham, SVG’s finance director, in an interview.

SVG’s stake in ProsiebenSat.1 incurred the largest of the three writedowns, having been valued in December 2007 at £118 million (€133 million; $167 million). Alongside the deteriorating economic environment, ProsiebenSat.1’s performance was affected by the introduction of a new advertising sales model in the first half of the year, said the firm.

Other holdings in SVG’s portfolio to suffer significant writedowns included Valentino Fashion Group – the owner of brands such as Hugo Boss and Marlboro Classics – which saw its valuation drop by 54 percent to around £79 million.

Cash management and deleveraging are the priorities for its portfolio companies, said the firm. SVG’s overall investment portfolio declined in value by 64.3 percent over the year.

“I don’t have to tell you private equity is out of favour,” SVG Chairman Nick Ferguson said on a conference call this morning, accordign to Bloomberg. “We’re unlikely to be making any new investments of any consequence for some time.”

The firm simultaneously announced the departure of Andrew Williams, chief executive of the fund management business, SVG Advisors. Williams has stepped down in advance of the company finalising and agreeing to its strategic review. Until the firm replaces Williams, his role will be carried out by chairman Nick Ferguson, who temporarily becomes executive chairman.

SVG is currently in discussions with its major shareholders, which includes a Coller Capital-managed secondaries fund, to finalise a wide-ranging review of its business. The $4.5 billion Coller International Partners V fund picked up £50 million-worth of shares from SVG’s February rights issue, securing a 20 percent stake in the business.

SVG has taken a number of recent measures to ensure it has enough liquidity to meet its capital commitments, including reducing its commitment to Permira’s fourth buyout fund and raising around £170 million from a rights issue and share placement.

SVG’s share price, which has lost 87 percent of its value in the last 12 months, intitally remained stable at around 90 pence following Thursday's results statement. On Friday morning, however, the share price slid further to hit an all time low of 70 pence.