SVG Capital changes course again, signs deal to sell portfolio to HarbourVest

London-based private equity firm SVG Capital has signed a deal for the sale of 100% of its investment portfolio to HarbourVest Partners, and to subsequently wind up the company, in an £807 million ($983 million) transaction.

The assets will be purchased by HarbourVest Structured Solutions III, known as HarbourVest Bidco. The deal price represents a 0.6% premium to the value of the investment portfolio as of July 31, said a regulatory filing Tuesday by SVG Capital.

Including the firm's current net cash resources, and net of costs, the deal equates to about 715 pence per share, an increase on an original offer by HarbourVest last month at 650 pence per share.

SVG Capital's board expects to return a total £1.1 billion to shareholders via a series of transactions and the winding up of the company. The board expects to return up to £350 million before year-end; up to £350 million in February; and a further £350 million in March or April. The final capital distribution resulting from the winding up process is expected to be in the second or third quarter 2017.

A number of agreements in principle had been announced prior to the deal signed Tuesday, including an offer to purchase SVG Capital's investment portfolio for £748 million, made by funds managed by Goldman Sachs Asset Management's alternative investments and manager selection group and certain investment entities managed by the C$287.3 billion ($218.6 billion) Canada Pension Plan Investment Board, Toronto.

The board has confirmed that it will recommend the deal to shareholders, and no longer intends to recommend the GSAM-CPPIB bid.

Since the first offer by HarbourVest Bidco in September, “the board has pursued a number of options in order to maximize shareholder value,” said Andrew Sykes, chairman of SVG Capital, in the filing. “The company has a high-quality portfolio with real scarcity value and through this process a number of highly credible and seasoned private equity investors have made offers for some or all of the investment portfolio.”

SVG Capital will now work to secure shareholder approval “with minimal delay so that we can begin the process of returning cash to shareholders as soon as possible,” Mr. Sykes added.