On a down day, private equity group SVG Capital is bucking the trend following a £1bn offer from US rival HarbourVest Partners.
The US group is offering 650p a share in cash, and has bought 8.5% of the business, meaning it has the backing of around 51.2% of the shareholder base.
Even so SVG has urged its investors to take no action on the “unsolicited offer”. It said it would publish half year results on 20 September when shareholders “will then have the relevant information on the company and its performance with which to consider the offer.”
HarbourVest managing director David Atterbury said:
While our offer does not currently have the recommendation of the board of SVG Capital, we look forward to a constructive dialogue with them in order to crystallise the certainty of value, today and in cash, to its shareholders.
SVG’s shares have jumped nearly 15% to 649.5p following news of the offer, suggesting the City thinks it will succeed. Analysts at Investec said:
Overall it looks like this deal is fairly far down the line ... Whilst the initial offer appear at a discount of 2.4% to the April net asset vale, this doesn’t take into account the foreign exchange moves since Brexit and the performance of the portfolio since April. As a result of foreign exchange alone we estimate the discount to be closer to 10%. However, despite this slightly wider discount this still appears an attractive offer with the majority of other private equity names trading wider than 10%, with a number of discounts greater than 20% offering investors in SVG an opportunity to recycle capital.
SVG is the biggest riser in the FTSE 250, which is currently down 1.5%.
Meanwhile a couple of defensive stocks have managed to edge into positive territory in the FTSE 100. AstraZeneca is up 7.5p at 4826.5p while Reckitt Benckiser is 7p better at £71.88.
