Brexit triggers £1bn hostile raid on buyout giant SVG Capital by HarbourVest

One of America’s biggest private equity firms made a surprise hostile bid on Monday with an opportunistic £1 billion-plus swoop on smaller British rival SVG Capital.

HarbourVest, a deal-hungry Boston-based outfit, has offered 650p a share to cash out SVG shareholders in a bid to take control of SVG’s collection of investments, which include indirect stakes in brands like Dr Martens and Kurt Geiger.

Four of SVG’s biggest investors — Coller Capital, Aviva, Old Mutual and Legal & General, who own shares worth 42.7% of the company — have accepted the offer but others, including SVG’S original parent company Schroders, are still undecided.

In an audacious dawn raid earlier, HarbourVest scooped up more SVG shares, giving it effective control of 51.2% of shares. It needs a minimum of 75% to delist the company.

SVG, led by chief executive Lynn Fordham, invests shareholder money in funds raised by large scale private equity groups in the UK, Europe and the US.

Over the past few years it has made a number of investments in new funds raised by private equity firms like Cinven and US group AEA, which was founded by the Rockefeller family, but this makes some investors wary. HarbourVest said the poor performance SVG will have to endure while these funds get off the ground makes its offer more attractive.

“Part of what we believe is compelling is the certainty of cash today versus the uncertainty of how the portfolio will develop in future,” the group’s managing director Peter Wilson said.

HarbourVest’s offer is likely to kick off a bitter tug of war between the company’s advisers over what price the group should pay.

The 650p offer is a near 15% premium to SVG’s share price on Friday although it is lower than the market value of SVG’s investment at the end of April, before the Brexit vote in June.

Weak sterling since then has made SVG’s portfolio of companies rise in value. SVG is predicted to reveal a higher value of its investments on Tuesday when it publishes interim results due to the weaker currency. A third of SVG’s underlying investments are in euros and just over half in dollars.

SVG said shareholders should wait until the results on Tuesday before deciding whether to accept the offer.

A takeover of SVG would wipe the group from the stock market after 20 years of listing. The company was formerly known as Schroder Venture Group, and was the buyout arm of Schroders.