SVB Financial Group told investors this morning that it would explore strategic alternatives to continue operations at SVB Capital.
Officials at the Santa Clara, California-based bank said its board of directors has appointed a restructuring committee consisting of five independent directors to explore strategic alternatives for the holding company and its SVB Capital and SVB Securities businesses.
The members of the holding company’s restructuring committee are venture capital investor Eric Benhamou; Tom King, former CEO of investment banking at Barclays; Kay Matthews, formerly of Ernst & Young; Mary Miller, the former Under Secretary for Domestic Finance for the U.S. Department of the Treasury; and Kate Mitchell, co-founder of Scale Venture Partners.
In addition to exploring potential transactions for the SVB Capital and SVB Securities businesses, the committee will explore all alternatives for addressing the approximately $3 billion of funded debt held by the holding company. Officials add this is recourse only to SVB Financial Group and is not guaranteed by the subsidiaries.
The holding company is being advised by Centerview Partners LLC, Sullivan & Cromwell LLP, and Alvarez & Marsal as financial, legal, and restructuring advisors, respectively, in conjunction with the committee’s activities.
Company officials added that SVB Capital’s venture capital and private credit fund business will continue to operate and serve clients through its existing management team. SVB Capital funds, the announcement read, are distinct legal entities from the bank.
Lastly, SVB officials said investment banking unit SVB Securities is still open for business, and the “resolution proceedings” for Silicon Valley Bank is not expected to directly impact the broker-dealer’s business operations.
The SVB Innovation Credit Growth Fund IX uses a venture debt strategy, focusing on lending to mid- to late-stage growth businesses in the technology, software, health care, and life sciences sectors. The fund provides loans on a first lien, senior basis with equity upside through warrants. Venture debt of this kind was pioneered by the bank, which until this past week has been in business for over 40 years.
Impact on institutional investors
Institutional investors such as the $43 billion Indiana Public Employees Retirement System, which allocated $150 million to Silicon Valley Bank Capital/SVB Innovation Credit Growth Fund IX over the summer, are actively monitoring the situation with SVB but officials at the pension system declined to comment further earlier this morning.
Another SVB Capital investor, the Florida State Board of Administration, which invested $25 million in SVB SIF-Ascension fund in 2021, did not get back to Alternatives Watch by press time.