UK private equity firm’s shares leap after £1bn US takeover offer

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UK private equity company SVG Capital’s share price jumped 15 per cent today after US rival HarbourVest made a more than £1bn takeover offer.

The all-cash offer of 650p per share values existing issued share capital at around £1.015bn.

The company said the offer is “highly attractive”, saying it represents a 14.7 per cent premium on SVG’s closing share price at the end of last week, 566.5p. Today, SVG’s share price soared by 15 per cent to 650p.

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HarbourVest also revealed the bid has been accepted by SVG's four biggest investors: Coller Capital, Aviva, Old Mutual and Legal & General.

The US company also itself bought 8.5 per cent of SVG shares, giving it effective control of more than 50 per cent of the group.

[stockChart code="SVI" date="2016-09-12 17:00"]

HarbourVest said the offer was final, meaning it cannot be increased.

SVG acknowledged the “unsolicited offer” this morning, with the board urging shareholders “to take no action at this time” ahead of interim results to be published on 20 September.

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David Atterbury, managing director of HarbourVest, said:

We believe that our final cash offer provides full, compelling and immediate cash value to the shareholders of SVG Capital at a fair and significantly lower discount to both SVG Capital’s last published net asset value (as at 30 April 2016) and the average discount to net asset value of its peers (as at 9 September 2016, based on information sourced from Morningstar).

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.

Importantly, we believe that the substantial level of irrevocable undertaking and letters of intent (being approximately 20 per cent and 22.7 per cent, respectively, and together 42.7 per cent, of the share capital of SVG Capital in issue on 9 September 2016) received from some of the largest shareholders of SVG Capital demonstrates the attractive nature of the offer.