SVG plots defence amid search for white knight

The London-listed private equity investor has until 29 September under the City Code to publish its defence document in response to HarbourVest’s 650p-a-share bid.

SVG Capital, the London-listed target of a £1.015 billion ($1.3 billion; €1.2 billion) unsolicited bid from HarbourVest, is plotting its defence as it seeks a bid to top the 650 pence-a-share offer from its much larger US rival.

Under the City Code on Takeovers and Mergers, the board of a targeted company has 14 days from the time an offer document is issued to let shareholders know its opinion of the offer and the recommendations it has received from independent advisors. Since Boston-based investment firm HarbourVest issued its offer document on 15 September, SVG has until Thursday to publish its defence.

Part of SVG’s defence strategy has been to search for a ‘white knight’ capable of making an offer higher than HarbourVest’s, which SVG has consistently said undervalues the company and its assets. At its interim results on 16 September, SVG urged shareholders to take no action concerning HarbourVest’s bid, saying it had received approaches “from a number of credible parties” that could potentially result in a competing bid.

SVG has not named these parties, but media speculation has focused on several private equity asset managers in particular, which are thought to possess the financial firepower and the specialist sector expertise needed to acquire a business as complex as SVG’s.

For example, The Sunday Telegraph reported on 25 September that as many as six potential bidders for SVG have emerged, citing sources. According to the newspaper, these possible bidders could include Amsterdam-based private equity investor AlpInvest, and is a unit of buyout giant the Carlyle Group; Carlyle’s own peers, Blackstone and KKR; and New York-based Lexington Partners, the world’s largest manager of secondaries and co-investment funds, with more than $34 billion in committed capital.

Lexington placed second after France’s Ardian in Secondaries Investor‘s SI 30 global ranking of the 30 top secondaries fund managers by capital raised over a five-year period.

Media reports have also named Deutsche Asset Management, Goldman Sachs Asset Management, and Switzerland’s Partners Group as possible bidders.

In an interview with The Sunday Telegraph, SVG chief executive Lynn Fordham said she believed that instead of simply trimming the SVG team and winding down the fund over time, as it is thought HarbourVest would do, another buyer could retain SVG’s management and put the £351 million cash SVG has on its books to work.

“I’m sure there are some people out there who have the ingenuity to think up something,” the newspaper quotes Fordham saying.

While an alternative bid to HarbourVest’s is a possibility, any suitors thinking of making an offer for SVG will have to contend with a number of complications. One is that SVG’s largest shareholder, London-based secondaries firm Coller Capital, has already tendered its 26.6 percent to HarbourVest, having formally accepted the 650 pence-a-share offer on 16 September.

That said, UK asset manager Schroders, SVG’s second-largest shareholder with 11.3 percent, has said it is supporting the firm’s management.

A spokesman for SVG declined to comment on media speculation over potential bidders for the firm.

SVG shares were 0.7 percent lower, but still above HarbourVest’s offer price, at 665 pence in early trading on Monday.

SVG is being advised by Melanie Gee, a senior advisor at Lazard, The Sunday Telegraph reported.