Coller eyes 6.5x return from SVG

Coller Capital, the largest shareholder in London-listed private equity investor SVG Capital, could reap a whopping 6.5x its money if an unsolicited bid to take SVG Capital private succeeds.

Earlier on Monday, Boston-based private equity investment firm HarbourVest Partners made a final cash offer to buy SVG in a deal that values the business at £1.015 billion ($1.3 billion; €1.2 billion). In the past, SVG was the biggest investor in funds managed by Permira, but in 2011, after the global financial crisis, SVG said it would seek to diversify its holdings beyond its core relationship with the firm; it now has a portfolio of six fund managers, including Cinven and Clayton, Dubilier & Rice.

HarbourVest said its offer of 560 pence a share, which will be financed from its $4.1 billion Dover Street IX Fund, is conditional on receiving valid acceptances from shareholders representing more than 50 percent of the voting rights in SVG.

Following the receipt of an undertaking from Coller, letters of intent from several shareholders including Aviva, Legal & General Investment Management, and Old Mutual, and HarbourVest’s purchase of 8.5 percent more shares in the open market, support for the bid is currently at 51.2 percent.

Coller invested in SVG from its 2006-vintage, $4.8 billion Coller International Partners V fund. The firm acquired a 23.9 percent stake, or 50 million shares, in a rights issue held in February 2009, amid the global financial crisis, for which Coller paid around 100 pence a share ($1.33 a share; €1.19 a share); this move essentially enabled Coller to gain access to Permira funds at a deep discount.

Investors in the Coller International Partners V fund include California Public Employees’ Retirement System, Canada Pension Plan Investment Board, State of Wisconsin Investment Board, and City of Miami Firefighters’ and Police Officers’ Retirement Trust, according to PEI data.

Coller now has 41.4 million shares in SVG, or about 26.6 percent of the business. According to HarbourVest’s offer announcement, Coller has already given an irrevocable undertaking to accept the offer for 31.2 million shares, representing about 20 percent of SVG’s share capital on 9 September, the last business day before the offer was made.

In addition, Coller has submitted a letter of intent to accept the offer in relation to a further 10.2 million shares, representing 6.6 percent of the issued capital in SVG, HarbourVest said.

Coller declined to comment on the size of its return if the SVG acquisition proceeds.

As SVG’s largest shareholder, Coller fought a long battle to reshape the company, making several unsuccessful attempts to block chief executive Lynn Fordham’s re-election to the board, and voting against resolutions relating to her remuneration.

Coller Capital was founded in 1990 by Jeremy Coller, who now serves as the firm’s chief investment officer.