HarbourVest Partners has launched an unsolicited bid to delist SVG Capital in an offer that values the private equity investor at about £1 billion ($1.3 billion; €1.2 billion).
The Boston-headquartered investment firm is aiming to acquire SVG using financing from its Dover Street IX fund, a secondaries fund that raised $4.1 billion, surpassing its target of $3.6 billion. Investors in Dover IX include the Michigan Department of Treasury, Houston Firefighters’ Relief and Retirement Fund, and Nebraska Investment Council, according to PEI data.
HarbourVest Structured Solutions III or HarbourVest Bidco, the exempted limited partnership established for the purposes of this bid, is making a full and final cash offer of 650 pence a share, a premium of about 14.7 percent over SVG’s closing price of 566.5 pence a share on 9 September, the last business day before the announcement. It is a final offer and cannot be raised.
The offer represents a discount of about 2.4 percent to SVG’s last published net asset value per share of 666 pence on 30 April.
Coller Capital’s Coller International Partners V gave HarbourVest Bidco an irrevocable undertaking to accept the offer, and it remains binding even if there is another bid for SVG. This represents 31.2 million or 20 percent of SVG’s shares on 9 September.
HarbourVest said it believes the offer is “highly attractive” for SVG’s shareholders, noting that the discount to NAV is “significantly lower than the long-term discount at which SVG Capital’s share price has traded at compared to its published NAV”.
SVG’s board urged shareholders “to take no action at this time”, saying the company will publish its interim results on 20 September. “Shareholders will then have the relevant information on the Company and its performance with which to consider the offer,” the board said.
HarbourVest has acquired listed private equity funds before, according to SVG’s broker Numis said in a research note. The firm bought Absolute PE for $806 million in 2011, and Conversus Capital for $1.4 billion in 2012.
HarbourVest Bidco said it has received an irrevocable undertaking and letters of intent supporting its bid from shareholders representing about 42.7 percent of SVG’s issued shares as at 9 September. HarbourVest went on to buy a further 8.5 percent of shares in the market.
Letters of intent to accept the offer came from SVG shareholders Aviva and its subsidiaries, Legal & General Investment Management and Old Mutual; these represent a total of 35.4 million shares, or 22.7 percent of SVG’s shares on 9 September.
HarbourVest said its offer is conditional on receiving valid acceptances from shareholders representing more than 50 percent of the voting rights. If the bidco receives valid acceptances of at least 75 percent of the voting rights, HarbourVest plans to delist SVG Capital from the London Stock Exchange.
London-based brokerage firm Liberum said in a research note that “given the level of support the bid has already received, it is highly likely to go through”. SVG’s share price has risen about 15 percent since the open, Liberum said, taking it slightly above the 650 pence per share offer price.
In sister publication Private Equity International’s Brexit Special published on 1 September, George Anson, HarbourVest’s London-based managing director, told PEI that in the wake of the Brexit vote, now may be a good time to do deals and make some acquisitions.
Recalling the firm’s tactics in its secondaries business following the 2008 financial crisis, Anson said that “with the benefit of hindsight, we should have loaded up on anything that moved and we didn’t”.
SVG has net assets of more than £1 billion. It invests with a small number of private equity fund managers so that it can build strong relationships with them. Its current portfolio consists of six private equity fund managers, including Cinven, Clayton, Dubilier & Rice, and Permira.
HarbourVest has $43 billion in assets under management. It invests across funds, secondaries and direct co-investments.