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Permira Backer SVG Assets Improve, Shares Jump

LONDON (Reuters) – SVG Capital Plc (SVI.L) said asset values rebounded after Permira — the buy-out group whose main backer it is — cut debt and saw the companies it owns improve their performance, sending its shares soaring.

The private equity investor, a listed proxy for Permira, said on Thursday its net asset value per share increased 30 percent to 222.9 pence from six months ago.

“Many portfolio companies show a meaningful improvement in cash-flow generation and earnings growth,” SVG Chief Executive Lynn Fordham said in a conference call with reporters after the publication of its full-year results.

SVG shares rose to their highest level since late in 2008, when they collapsed at the height of the credit crisis. The stock stood at 144.6 pence at 1016 GMT on a 10.6 percent rise, with the results topping analysts’ expectations.

“The story has broadly been one of significant and proactive restructuring by Permira, focusing on cost cutting, operational improvements and balance sheet repair,” JPMorgan Cazenove analyst Chris Brown said in a note to investors.

Permira reduced debt across its portfolio in 2009 by 4.5 billion euros ($6.15 billion); in cases like Valentino Fashion Group buying back debt from lenders at a discount to relieve the over-burdened balance sheet.

Permira itself wrote up the value of its portfolio by 24 percent in the second half and by 22 percent for the full year, a spokesperson for the firm said, as improving stock market comparisons also lifted portfolio companies.

While private equity dealmaking is showing signs of coming back to life, buyout firms wanting to float their businesses have received a knock-back from public markets.

Permira, with deal partner Apax, put plans to list fashion chain New Look on ice last month after investors rebelled against plans to use 450 million pounds ($677.7 million) of the proceeds to pay off debt. [ID: nLDE61B0DG]

“We’d all be happier in the sector if the markets were fully open again,” said Fordham.

New Look’s owners, including founder Tom Singh, scrapped previous flotation plans in 2007. But Fordham maintained it is a good business which has paid it back more than twice its initial equity investment. ($1=.6640 Pound) ($1=.7317 Euro)

By Simon Meads
(Editing by Greg Mahlich and Rupert Winchester)