The board of SVG Capital agreed in principle to sell 100% of its investment portfolio to funds managed by a Goldman Sachs Asset Management unit and certain investment entities managed by the C$287.3 billion ($218.8 billion) Canada Pension Plan Investment Board, in a £748 million ($970.3 million) deal.
The deal represents a 6.8% discount to the value of the investment portfolio at July 31, said a regulatory filing by SVG Capital on Thursday. The deal equates to a value of 680 pence per share.
The deal comes two days after SVG Capital agreed to sell 50% of its investment portfolio to private equity managers Pomona Capital and Pantheon Ventures, at a 7.8% discount to the value.
Should the CPPIB-GSAM deal be completed on these terms, about £1.06 billion would be returned to shareholders through a series of tender offers and the winding down of the company. SVG Capital would make a £450 million tender offer before the end of 2016, at 680 pence per share. It would then make a £300 million offer in January or February, at the same value per share, followed by a March tender offer of £270 million. Final capital distribution in the winding down process is expected to be in the second quarter.
The board will recommend the proposed sale of the portfolio to GSAM’s alternative investments and manager selection group and Toronto-based CPPIB, subject to formalizing documentation. It no longer intends to recommend the sale to Pomona Capital and Pantheon Ventures. Completion of the sale to Goldman’s AIMS group and CPPIB is also conditional on the lapse or withdrawal of an offer by HarbourVest Bidco last month at 650 pence per share and appropriate shareholder approvals.
In a comment in the filing, Andrew Sykes, chairman of SVG Capital, said the board believes this offers greater certainty than the proposed sale of 50% of the portfolio to the private equity firms, and “will generate superior value compared with the existing 650 (pence) a share cash offer from HarbourVest Bidco.”
“CPPIB and Goldman Sachs AIMS group have a reputation as preferred partners to private equity fund managers because of our established brands and primary and secondary investment capabilities,” added Jim Fasano, managing director, head of funds, secondaries and co-investments at CPPIB.
Harold Hope, managing director at Goldman Sachs AIMS group, added that the group has worked with CPPIB on similar transactions in the past, and “have a track record of differentiating ourselves based on our experience in the market, our reputation for working with sellers to close transactions quickly and efficiently, our relationships with private equity managers, and our broad financial and structuring expertise.”
