A newly created entity will acquire SVB Capital for an unknown amount, comprising cash and other economic considerations, and will be supported by Brookfield and Sequoia Heritage
Silicon Valley Bank office in Menlo Park, California. (Credit: King of Hearts/Wikipedia)
California-based troubled lender SVB Financial has announced its plans to sell its venture capital business SVB Capital to an entity affiliated with Pinegrove Capital Partners.
SVB Capital manages about $10bn in investments that have contributed capital to the investment fund, on behalf of about 750 limited partner investors, such as public pensions.
Brookfield and Sequoia Heritage will support the newly created entity, which will acquire SVB Capital for an unknown amount, comprising cash and other economic considerations.
Pinegrove and SVB Capital will operate independently, led by their existing management teams, with common long-term financial support from Brookfield and Sequoia Heritage.
Earlier this year, SVB Financial announced its plans to divest its remaining venture capital business to a new, creditor-backed company.
SVB Financial Group chief restructuring officer Bill Kosturos said: “We believe the agreement maximizes the value for the benefit of SVB Financial Group’s constituents, with a significant cash component as well as the ability to participate in the future upside potential of the business.”
In March last year, SVB Financial was shut down by the California Department of Financial Protection and Innovation (DFPI), after a swift collapse.
SVB collapsed after the bank announced the sale of securities worth $21bn, borrowed $15bn and a fall in the market value of its Treasury bonds, purchased during the Covid-19 pandemic.
The US lender also prepared for an emergency sale of some of its treasury stock to raise $2.25bn, to repay its depositors.
After the collapse, which is said to be the largest bank failure since the 2008 financial crisis, SVB filed for bankruptcy, and US authorities launched emergency measures.
The alliance, including MFN Partners, Pacific Investment Management Company, Bank of America Securities, JP Morgan Securities, and King Street Capital are supporting the deal.
The transaction is also supported by SVB Financial’s key creditor groups and is subject to regulatory approval and other customary closing conditions.