SVG Capital has written up the holding value of its quoted assets to £75 million (€84 million; $125 million), an increase of £26.5 million since its last valuations were released at the end of June. The recent figure, which takes into account related distributions and carry adjustments, translates to an increase of 8.4 pence per share.
SVG’s listed fund of funds vehicle invests primarily in Permira funds. Its listed assets account for less than 10 percent of SVG's total investment portfolio.
“The performance of the portfolio companies has continued to stabilise and, in many instances, has been strengthening despite a challenging operating environment,” SVG said in an interim management statement. “Permira and the underlying company management teams have worked hard on mitigating the impact of the downturn which, in our view, leaves the majority of the portfolio well positioned to capitalise on the recovery. A few more cyclical companies are still experiencing earnings pressure and Permira continue to closely monitor capital structures and proactively strengthen and restructure balance sheets where necessary.”
Permira and the underlying company management teams have worked hard on mitigating the impact of the downturn which, in our view, leaves the majority of the portfolio well positioned to capitalise on the recovery.
The London-listed fund of funds met capital calls totalling about £50 million from July through the end of October. “We expect calls from the underlying funds, in particular Permira IV, to pick up in coming months,” the firm said.
It also expects realisations to increase as market conditions continue to improve, noting Permira has been selling down stakes in publicly listed companies over the past few months. The reduction of its stake in Freenet, a German telecoms company, from 25 percent to 10.1 percent netted SVG £12.2 million and valued its remaining stake at £19.4 million. Permira has also been gradually selling down its stake in struggling Italian semiconductor memory chip maker EEMS since June. EEMS was an investment made in 1999 from Permira’s first fund (raised as Schroder Ventures Europe), which is understood to have booked four times its initial $55 million investment via partial exits to date.
SVG has also purchased €40 million of mezzanine debt in P25, a feeder fund for Permira III and Permira IV. The notes, which have a 30 percent annual return and a negotiable 3.5 year term, augment SVG’s 48 percent equity stake in P25.
As of the end of October, SVG’s cash balance was £171.4 million, while its debts totalled £237.2 million. About £450 million of a bank facility remained undrawn.
SVG’s shares were trading at around 131 pence per share at press time, giving it a market capitalisation of about £408 million. Last week its shares were trading at about 130 pence each, equating to nearly 37 percent discount to net asset value, according to LPEQ , an organisation of listed private equity funds and trusts in Europe.