LONDON (Reuters) – SVG Capital SVI.L, the main investor in European buyout fund Permira, launched a deeply discounted 200 million pound rights issue to prop up its finances as it took a 40 percent hit to its portfolio.
SVG, a London-listed private equity firm which accounts for about one third of the investments in Permira, confirmed on Thursday it would take up Permira’s Dec. 5 offer of a reduction of SVG’s overall commitments to the fund to 60 percent of previous levels. [ID:nL522650]
By 0855 GMT SVG shares were trading more than 25 percent lower at 136 pence.
“By raising this additional capital, increasing the borrowing headroom under our financial covenants and capping our commitment to Permira IV, we will transform our balance sheet and put ourselves in a strong position to steer through these uncertain times,” said Nicholas Ferguson, Chairman of SVG Capital in a statement.
He told reporters the moves would leave the company with 750 million pounds in cash and bank credit lines compared with less than 350 million pounds in uncalled commitments to Permira, down from almost 800 million previously. Uncalled commitments are funds promised but not yet delivered.
Permira’s deal with its funding investors allows them to reduce their uncalled commitments to 60 percent of previous levels in exchange for a 25 percent reduction in their returns. Management fees continue to be based on the original commitment level.
SVG said on Thursday it would make a provision of 40 pct against its investment portfolio which would cut its net asset value per share to 431 pence a share.
It plans to raise 200 million pounds in a one-for-one rights issue at 100 pence a share, a 45.1 percent discount to the closing price on Wednesday.
It said the rights issue was being backed by 48 percent of its shareholders and was partially underwritten by JP Morgan Securities.
By Myles Neligan
(Additional reporting by Andrew Callus; Editing by Jon Loades-Carter) ($1 = 0.6485 pound)