SVG banishes the ghosts of the past

SVG was seen as just one of the many private equity casualties left in the wake of the collapse of Lehman Brothers back in 2008. The LP had several years earlier signed an agreement to exclusively back Permira funds; a deal which was seen as revolutionary at the time but would, perhaps inevitably, turn sour.

When the value of SVG's assets plummeted during the financial crisis, it was unable to commit what it had promised to the Permira funds, forcing it into the embarrassing situation of reneging on its deal with the GP. Both firms were hurt by the revelations, though it was SVG that took the bulk of the reputational damage.

Just last year, the fund-of-funds manager looked to be in terminal decline, with Coller Capital, which owns 20% of the business, calling for it to be wound down.

However, after so much bad news in recent years, SVG has managed a spectacular turnaround, giving the business renewed hope for the future.

SVG's latest financials reveal the firm saw its net asset value (NAV) grow by 16% in 2012. The firm also announced that Aberdeen Asset Management, a FTSE 100 asset manager that has assets under management of almost £200bn, would take a 50.1% stake in SVG Advisers (its private equity arm) for £17.5m.

Aberdeen has a relatively small existing private equity business with assets of around £700m, but the deal will see the combined business, called Aberdeen SVG Private Equity, hold total assets of almost £5bn. SVG's chief executive Lynn Fordham will continue to run the business and will sit on a new combined board.

Furthermore, Aberdeen will have the option to acquire the remaining 49.9% stake in the business by 2016, an option it is supposedly keen to exercise (its chief executive apparently would have preferred to acquire the entire business today, but clearly SVG believes it is worth holding onto for a little longer).

SVG also announced its first investment in a non-Permira fund in years, saying it will commit €100m to Cinven's fifth fund. It is also thought to be reviewing whether to invest in Permira's latest offering and says it remains positive about the GP. Lastly, the business said it will seek to return £300m to investors over the coming three years.

While other firms that were hit during the financial crisis have seen little improvement in their fortunes, the recent news at SVG is encouraging for its future. That a major asset manager like Aberdeen is also keen to increase its exposure to private equity is also a positive endorsement of the asset class.

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