SVG’s value rises on Permira exits(2)

SVG, the London-based fund manager, increased its net asset value per share on the back of several realisations by UK buyout firm Permira in whose funds the majority of its capital is committed.

SVG increased its net asset value by 12.4 percent per share according to its interim results for the six month period up to 30 June 2007. The results take in to account a dividend of 7.5 pence paid by the firm in May,

The fund of funds’ net assets per share were £9.58 (€13.99, $19.42) up from £8.59 in December 2006. The fund of funds advisory business SVG Advisers’ external revenues increased by nearly 90 percent during the six months, to £15.7 million. Its funds under management have grown to £3 billion, an increase of 33 percent since December 2006, while its profit was £10 million in the first half.

“The underlying portfolios across the board have performed very well as they are cashflow businesses. During the last three reporting periods we had a very high level of sales which with hindsight is very pleasing,” SVG’s chairman Nick Ferguson said. Ferguson separately warned the Treasury to avoid tinkering with tax deductibility on interest on loans, which is reported here.

SVG’s portfolio of investments has risen in value by £157.4 million up to £1.27 billion on 30 June.

Eighty six percent of SVG’s funds are invested in funds managed by Permira, which had an active half for realisations. Permira sold the majority of its stake in Intelsat Holdings, SVG receiving £66.4 million and retaining £5.3 million at the time of the sale, which represents a near three times uplift of £45.7 million to Intelsat’s December 2006 valuation. It also had successful realisations from the sale of German fashion chain Takko for €770 million ($1 billion), the €1 billion refinancing of Dutch retailer Maxeda and the refinancing relating to the £6.15 billion merger of British motoring services company the AA with Saga.

Two of the realised deals have been controversial.

Maxeda’s debt syndication was pulled by the underwriting banks. This was regarded by many as one of the first indicators that problems in the sub-prime sector had spread into the leveraged loan markets.

The AA-Saga merger has been strongly attacked by the UK GMB union for the profits made from the merger. The owners Permira and CVC Capital Partners cut around 3000 jobs shortly after taking over the company, the union alleges. The merger valued SVG’s stake in the company at £80.9 million representing a £41.1 million increase in value compared with December last year.

Twelve new and 15 follow-on investments were made in the first half by SVG’s private equity business, representing £312.8 million. These included Permira’s €2.4 billion acquisition of Italian designer Valentino Fashion Group and a follow-on investment in Principal Hotels to support the acquisition of Hayley Conference Centres for an undisclosed sum.