SVB Capital also has ties to Silicon Valley Bank in that about 110 bank employees are "key members" of SVB Capital, said William C. Kosturos, chief restructuring officer of SVB Financial Group, the parent of SVB Capital, in his March 19 declaration supporting the Chapter 11 bankruptcy.
Federal Deposit Insurance Corp. officials referred questions about whether those employees will become employees of First Citizens to First Citizens. Barbara Thompson, a First Citizens spokeswoman, did not immediately respond to questions. The FDIC seized control of Silicon Valley Bank on March 10, after a run on deposits left it insolvent. The FDIC announced Silicon Valley Bank's sale to First Citizens on Sunday.
SVB Capital has about $9.5 billion in assets under management, Mr. Kosturos said in his declaration.
SVB Financial had about $141 million in unfunded capital commitments as of March 17.
SVB Capital's investors, including large pension funds, are taking note of the developments.
"At CalSTRS, we continually monitor the market and any events that may have an impact on our investment portfolio," said Christopher J. Ailman, CIO of the $306 billion California State Teachers' Retirement System, West Sacramento, in an email.
CalSTRS is an SVB Capital investor, including commitments of $75 million to SVB Capital Strategic Investors Fund X, a venture capital fund of funds, in 2020, and $25 million to SVB Capital Partners IV, an early stage venture capital fund, in 2017.
"We also have banking and lending exposures through our partners/advisors and portfolio companies," Mr. Ailman said.
And CalSTRS held about $11 million in Silicon Valley Bank stock, with no bonds as of March 9.
"We are a long-term investor with a highly diversified portfolio … constructed to weather individual economic issues," he said. "The Teachers' Retirement Fund remains safe."
Officials at the Indiana Public Retirement System, Indianapolis, are also "actively monitoring the situation," said Dimitri P. Kyser, spokesman for the $46.3 billion retirement system, which includes its $39.5 billion defined benefit plan.
In July, INPRS committed $150 million to Innovation Credit Growth Fund IX, which is managed by SVB Capital and lends to mid- to late-stage growth businesses, primarily in the enterprise software and health-care sectors, Mr. Kyser said. So far, INPRS has invested $39.6 million of the pension fund's commitment, he said. INPRS' commitment and current investment are owned by the fund, which is separate from Silicon Valley Bank, Mr. Kyser noted.
Meanwhile, Florida State Board of Administration is continuing to monitor and communicate with partners involved in the SVB matter, spokeswoman Emilie Oglesby said in an email.
SVB Capital manages $1.5 billion of the FSBA's private equity portfolio and $150 million of its strategic investments portfolio, Ms. Oglesby said.
The Tallahassee-based board oversees a total of $232.5 billion, including the $181.7 billion Florida Retirement System.
While SVB Capital is not strictly part of the bankruptcy, SVB Financial, the entity that is in bankruptcy, is the funds' investment adviser and, SVB Capital generates income for SVB Financial primarily through investment returns and management fees, according to Mr. Kosturos' bankruptcy court affidavit.
What's more, SVB Capital funds appear to be up for sale, which would be subject to the approval of the bankruptcy court, SVB Capital's LP letter said.
"The bankruptcy court does defer to the business judgment of the debtor, but the court ensures that the debtor is running an appropriate process," said Mark Shapiro, a partner and chairman of the financial restructuring and insolvency group at law firm Shearman & Sterling. Mr. Shapiro is not involved in the SVB Financial bankruptcy. "The objective is to maximize the value of the estate."
The sale process is typically overseen by a bank or broker, and confidential information about the assets are reviewed by interested buyers under a non-disclosure agreement, he said.
"The bidder that provides the highest and best offer would typically be selected and presented to the bankruptcy court for approval, often as a 'stalking horse' bid," Mr. Shapiro said.
However, it's possible that someone could show up at the hearing and could up the price, he said.
Whether limited partners have any rights in connection with the sale depends on their limited partnership agreement and state law, Mr. Shapiro said. Some limitations on the sale of a managing member interest can be overridden by bankruptcy law, he added.
"If the limited partnership agreement or applicable state law doesn't allow for a change in control at the top without LP consent, LPs may have a role and can object to a sale," Mr. Shapiro said.
In general, limited partners have an economic interest but typically don't have governance rights, said Joseph T. Moldovan, chairman of the bankruptcy, restructuring and governance practice at law firm Morrison Cohen. Sometimes, that can change in bankruptcy, he said.
However, Mr. Kosturos' declaration does not mention SVB Capital's LPs.
Indeed, what will become of SVB Capital funds' LPs "is still in a state of unknown, given SVB Capital is still up for sale," said Mina Pacheco Nazemi, head of Barings' diversified alternative equity business, which creates customized private equity and real assets solutions across co-investments, secondaries and primary funds.
"That said, it's surprising that SVB Capital hasn't been acquired yet, given the high quality VC managers in the portfolio (Accel, Andreessen Horowitz, Sequoia, etc)," Ms. Nazemi said in an email. "The underlying managers have little control over who buys SVB's stake in their businesses, but there have been reports of cautious optimism that a buyer will continue to operate SVB Capital per usual. Until then, LPs should keep a close eye on ongoing developments."
Barings' diversified alternative equity business has $5.7 billion in assets under management. Barings had about $347 billion in AUM as of Dec. 31.
In the wake of SVB's collapse, Ms. Nazemi said the venture capital industry could go "back to basics" as it did after the internet bubble popped.
"The most important thing that should come out of this SVB situation is better scrutiny on valuations in the sector and just simple understanding of businesses and how to get to profitability without the required exorbitant use of capital," Ms. Nazemi said. "The sector does need fiscal discipline to attract investors to the asset class."
