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SVG Capital raises fresh capital and reduces Permira commitments

SVG Capital, a London-listed fund of private equity funds that mostly invests in funds managed or advised by Permira, has announced a one-for-one partially underwritten rights issue and

SVG Capital, a London-listed fund of private equity funds that mostly invests in funds managed or advised by Permira, has announced a one-for-one partially underwritten rights issue and placing that should raise around GBP200m.

It is also capping its commitment to the Permira IV fund at 60 per cent of the originally agreed amount.

The firm says the rights issue and placing allow existing shareholders to participate in a pre-emptive offering and also provides SVG Capital with the opportunity to attract new shareholders.

In addition, SVG Capital says, the extra capital will further strengthen its balance sheet in challenging market conditions and enhance its financial flexibility to take advantage of investment opportunities arising from the current market volatility.

‘This comprehensive package of measures will provide our shareholders with increased certainty against very turbulent market conditions,’ says chairman Nicholas Ferguson. ‘By raising this additional capital, increasing the borrowing headroom under our financial covenants and capping our commitment to Permira IV, we will transform our balance sheet and put ourselves in a strong position to steer through these uncertain times.’

In light of the current market environment, SVG Capital is taking a provision of 40 per cent against the valuation of its investment portfolio at 30 June, which would result in an adjusted NAV per ordinary share at 30 November of GBP4.31, including an unaudited directors’ valuation of 37 pence per ordinary share for SVG Advisers.

SVG Capital has elected to cap its original commitment to Permira IV at 60 per cent, resulting in a reduction of total uncalled commitments of GBP796.3m to GBP343.8m, as calculated according to foreign exchange rates at 30 November. In addition, the firm has renegotiated covenants with its senior lenders to provide added financial flexibility.

The issue price for the new ordinary shares of GBP1 represents a discount of 45.1 per cent to the closing price on December 17, a 25.2 per cent discount to the theoretical ex-rights price of 134 pence and a 49 per cent discount to adjusted post-issue NAV.

Shareholders holding 48 per cent of SVG Capital’s issued ordinary shares have indicated that they will take up their entitlements under the rights issue in full, as have the company’s directors.

In addition to investing in Permira funds, SVG Capital invests in private equity funds that invest in Japan, North America, Asia and the life sciences sectors, and in unquoted and quoted businesses through specialist funds and co-investments alongside them. It may also invest in other private equity-related assets and alternative asset classes.

The company’s fund management business structures, markets, manages and advises products for investment in private equity, private equity related assets, alternative asset classes and in public equity using private equity techniques.

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