SVG Capital to continue relationship with Permira but freezes commitments

Following the results of a strategic review, SVG Capital, Permira's biggest investor, has said it will continue its relationship with the private equity group and remain a UK-listed investment trust. But according to reports, the company will not make any new commitments to third-party funds until it is in a position to offer its shareholders a return of capital.

Recently, SVG has been looking to improve the strength of its balance sheet, having just raised £171m in a rights issue in March. Its shares have fallen by more than 85% over the past 12 months.

Permira funds represent 75% of SVG's investment portfolio and its decision to freeze new commitments can be seen as a reflection of Permira's poor portfolio performance. The private equity group recently wrote down five of its investments to zero: UK gaming group Gala Coral, German broadcaster ProSiebenSat.1, Hungarian chemicals maker BorsodChem, Italian yachtmaker Feretti and Spanish clothes retailer Cortefi el. This has brought SVG's net loss for 2008 to £864.4m.

SVG's chairman Nicholas Ferguson has said that the company will not be in a position to return capital for at least 12-24 months, but it has no plans to scale back its commitments from Permira. Ferguson has reportedly said that once the company's conditions improve, shareholders will be given an option between reinvestment and return of capital.

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