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SVG board hits back at HarbourVest's unsolicited takeover bid

Kenny Wastell
@kennywastell
16 September 2016

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The board of listed fund-of-funds firm SVG Capital has said the recent cash offer by HarbourVest to wholly acquire its shares “undervalues the company and its assets”, while releasing its half-year results to show an increase in NAV.

Earlier this week, HarbourVest made a final offer to acquire all SVG shares at 650 pence apiece, giving the firm an equity value of £1.02bn. The figure values the LP's shares at 14.7% above their closing price on 9 September and 23.1% above their average price over the preceding six-month period.

SVG has responded by releasing its latest half-year results four days earlier than planned, in which it revealed it has a net asset value of £1.15bn, equivalent to a 12% increase over the course of six months. The firm also reports an investment portfolio return of 13% during the period.

In the results, the firm's board urged shareholders to take no action, saying the business has received "approaches from a number of credible parties" that it believes could result in a higher offer than that made by HarbourVest.

However, HarbourVest has received an irrevocable agreement from a shareholder owning a 20% stake in SVG, as well as letters of intent from shareholders with a further combined stake of 22.7%. In addition, HarbourVest completed the acquisition of an 8.5% stake in SVG this week, meaning it would hold a 51.2% stake in the business, should the aforementioned letter of intent bear fruit.

During the six months, SVG also made commitments of £273m across three funds, comprising €120m in commitments to the latest funds of IK Investment Partners and Cinven, as well as a $125m commitment to the latest vehicle raised by US firm L Catterton.

HarbourVest is currently undertaking an extensive international expansion strategy, having opened offices in Toronto, Tel Aviv and Seoul since the beginning of 2015.

The latest development comes seven months after the firm acquired the Capital Access Fund group, the dedicated fund-of-funds arm of Bank of America Merrill Lynch. HarbourVest's purchase of Capital Access Fund formed part of its Horizon strategy, a scheme set up to target traditionally overlooked investment areas and managers.