A bidding war for SVG Capital (SVG) has ignited after HarbourVest upped its offer in an attempt to challenge the board's previously preferred option.
SVG is in detailed discussions with a group of investors led by Goldman Sachs and the Canadian Pension Plan Investment Board (CPPIB), who came in with an eleventh hour offer to purchase the assets of SVG.
However, HarbourVest has delivered an updated offer to purchase SVG's assets and said this valued the group "in excess of 700p per share". In response, the SVG board revealed that it may now be softening to the US fund giant's advances.
"The company's advisers will meet with HarbourVest's advisers later today to understand the details of the asset purchase transaction," SVG said this afternoon.
HarbourVest kicked off a hostile takeover attempt on 12 September and gave shareholders until 6 October to accept.
Despite protestations by the SVG board that the 650p offer significantly undervalued the group, until 5 October it was believed that HarbourVest had gathered greater than 50 per cent of shareholder support for its offer, enough to give the deal the green light.
The Goldman Sachs/CPPIB offer was received on the afternoon of 5 October and the finer details disclosed on the morning of 6 October. Despite previously recommending an offer received last week to sell half of the fund assets to private equity funds Pantheon and Ponoma, the board changed its mind and backed the Goldman Sachs/CPPIB deal.
This means that with today's news, the board has three offers on the table. As it has previously accepted both the Goldmans Sachs/CPPIB and Pantheon and Ponoma deals if it does not follow through with these there will be multi-million pound break clauses to pay.
How the two main deals compare
|Offer date||10 Oct 2016||6 Oct 2016|
|Valuation of investment portfolio||£783m||£748m|
|Add: Net calls and distributions||£26m||£26m|
|Less: Costs to wind down SVG||£(33m)||£(33m)|
|Less: break fee to Pantheon/Ponoma||£(2.5m)||£(2.5m)|
|Less: break fee Goldman Sachs/CPPIB||£(3.5m)||£0|
On 6 October, Coller Capital and Old Mutual were believed to be the remaining institutional supporters of HarbourVest's first offer after Legal & General and Aviva dropped their support late on 5 October.
Shareholders who have previously supported the board include fund manager Schroders, out of which SVG was originally spun-off and Standard Life.
Two per cent shareholder Standard Life reaffirmed its support of the board this afternoon. "Standard Life Investments is supportive of the SVG Board’s proposition to maximise value for shareholders by liquidating the portfolio in an orderly manner,” a spokesperson said.