SVG Capital To Keep PE Focus, Remain Listed

LONDON (Reuters) – SVG Capital SVI.L said on Tuesday it will continue its relationship with private equity group Permira and remain a UK-listed investment trust, following the outcome of a strategic review.

SVG, Permira’s biggest investor, said it had set a near-term objective to improve the strength of its balance sheet, having raised 171 million pounds ($249.7 million) through a rights issue in March.

The company said it will not make any new commitments to third-party funds until it is in a position to offer shareholders a return of capital.

Its net asset value declined by 64 percent last year, reflecting big writedowns on some Permira assets, including those in gaming group Gala Coral, broadcaster ProSiebenSat.1 (PSMG_p.DE), and chipmaker Freescale.

Despite that, Chairman Nicholas Ferguson told reporters SVG had “no desire” to scale back its investment in Permira.

“Permira have a very good long-term track record, one of the best in the industry. Every private equity group is inevitably going through a difficult time at the moment,” he said.

Permira funds represent 75 percent of the company’s investment portfolio and SVG said that would not change materially in the short term. SVG said Permira’s Damon Buffini would be stepping down from the SVG board but would remain the principle relationship manager at Permira for SVG Capital.

“He’s simply decided this is a good time to step down. The relationship remains close. There are no problems or issues there,” Ferguson said.

Ferguson said the company would not be in a position to return capital until there was a significant improvement in the market environment.

“We would not expect to receive any major distributions from our investment portfolio over the next 12 to 24 months.

“Once conditions improve, the company intends to offer investors flexibility between reinvestment and return of capital.”

He said such a recovery was more likely to be towards the back-end of that timeframe.

Ferguson said the group’s major shareholders had been consulted over the new strategy and were supportive.

Shares in SVG Capital, which have shed more than 85 percent of their value over the past 12 months, were up 0.5 percent to 98.5 pence by 1005 GMT.

(Editing by David Holmes; Editing by Andrew Macdonald) ($1=.6847 Pound)