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Categorized | Financial

Goldman linked to rival bid for SVG Capital

Posted on October 3, 2016

LONDON, ENGLAND - SEPTEMBER 07: Lynn Fordham of SVG Capital descends the Cheesegrater for The City Three Peaks with The Outward Bound Trust And The Royal Navy And Royal Marines Charity on September 7, 2015 in London, England. (Photo by Eamonn M. McCormack/Getty Images for the Outward Bound Trust and the Royal Navy and Royal Marines Charity)

Lynn Fordham of SVG Capital

Goldman Sachs and the Canada Pension Plan Investment Board are considering a joint bid for SVG Capital, less than a month after the UK private equity group rejected an unsolicited £1bn offer from US umbrella fund HarbourVest Partners. 

SVG said on Monday that it was “in detailed discussions” with a consortium of Goldman and CPPIB about a possible alternative bid to the 650p-per-share offer from HarbourVest. 

    The London-listed private equity group also said that another unnamed group had approached it “with an interest in making a consortium offer provided that it can find a partner”, and that a third, unnamed, group “may be interested in considering an offer”.

    SVG urged shareholders to “take no action” and said it would provide investors with further information on Tuesday.

    Shares in SVG were relatively flat on Monday, trading at 682p per share, nearly 5 per cent above HarbourVest’s offer price of 650p per share. 

    Boston-based HarbourVest, which has $42bn under management, made its hostile takeover bid for SVG last month, at a 14.7 per cent premium to the group’s closing price the last trading day before the offer. 

    But the offer, which HarbourVest said was final, was swiftly rejected by SVG chief executive Lynn Fordham, who said it undervalued the company and its assets. 

    She also said at the time that the company had received several approaches that had the potential to be “more attractive” and it was focused on “delivering maximum value to its shareholders”. 

    SVG, which was spun out of the private equity arm of Schroders in 1996, was historically the biggest investor in funds run by Permira, the European buyout group. But it diversified its strategy after a plunge in the value of its Permira investments in 2008 forced it to launch a rights issue.

    Yet despite delivering consistent growth since the strategy shift, SVG has repeatedly come under pressure from shareholders. 

    Coller Capital, a leading investor in second-hand private equity interests, became SVG’s largest shareholder in 2009. While Coller remains SVG’s biggest investor, holding more than 26 per cent of the company, it has put forward multiple resolutions to oust Ms Fordham. In 2012 Coller even called for SVG to be wound down, with cash returned to shareholders.

    Coller has irrevocably backed HarbourVest’s bid, and HarbourVest recently bought an 8.5 per cent stake in SVG. Other shareholders with a combined 22.7 per cent stake, including Aviva, Old Mutual and Legal & General have signed non-binding letters of intent to back the bid.

    However, Schroders, SVG’s second-largest shareholder, has thrown its weight behind Ms Fordham, saying last month that it was “supportive” of management.

    HarbourVest declined to comment. However, the firm’s managing director, David Atterbury, said last week that HarbourVest continued “to believe that [the] full and final cash offer provides full, compelling and immediate cash value to the shareholders of SVG Capital”.

    Sky News first reported that Goldman and the Canada Pension Plan Investment Board were mulling a bid. Goldman Sachs declined to comment. Canadian Pension Plan Investment Board could not be reached for comment.