A number of funds made comments on the fallout from the collapse of Silicon Valley Bank and Signature – as far as we can tell, there is nothing earth-shattering here. HarbourVest may be worrst-affected. Although as the managers of Polar Capital Global Financials Trust suggest, this episode may not be quite over yet.
- NB Private Equity Partners (NBPE) provided a brief update regarding Silicon Valley Bank, confirming to investors that the company has no direct exposure to SVB or Signature. Management noted that they have been actively engaged in assessing the exposure of NBPE’s portfolio investments to SVB and Signature. While the review of the portfolio is ongoing, based on their analysis of a meaningful majority of the top 30 companies in the portfolio, they have found the exposure to SVB and Signature to not be material to NBPE.
- HarbourVest private Equity (HVPE) said SVB represents only 2% of the aggregate cash and cash equivalents held by HarbourVest funds. SVB provides subscription line credit to a small number of HarbourVest funds in which HVPE is invested. Initial analysis shows that HVPE’s exposure is limited, with less than 6% of the HarbourVest fund-level borrowing. [Without these credit lines, HarbourVest’s commitments may be called down slightly faster, but we would expect that the funds will negotiate new arrangements with other banks. There could be additional interest expense associated with this.] The investment manager takes positive note of the recent statements from the FDIC that all deposits have been guaranteed, as well as the announcement of HSBC’s purchase of SVB’s UK subsidiary. The investment manager believes these actions will help stabilise market conditions and enable ongoing operations for General Partners and portfolio companies in HVPE’s portfolio.
- Pantheon International (PIN) says that neither it nor the manager has any credit or deposit facilities with SVB directly. Pantheon is actively engaging with the company’s underlying managers, including all of the key venture capital relationships, to continue to closely monitor the situation.
- Hg Capital Trust (HGT) says that there is little to no impact on HGT from the collapse of Silicon Valley Bank. Neither Hg, nor any of its managed funds, have related loan or borrowing exposure with SVB. · None of the underlying portfolio companies have any outstanding borrowings with SVB. · A small number of the underlying portfolio companies have limited deposits with SVB, but no portfolio business is at risk as a result of this [and as far as we can tell cash deposited at SVB is not at risk].
- RIT Capital Partners (RCP) has no direct exposure to Silicon Valley Bank in either the US or UK, nor to any of SVB’s affiliate entities. RIT has been in touch with the substantial majority of its third-party managers and portfolio company partners over the last few days. The vast majority of RIT’s holdings have confirmed either no or de minimis exposure to SVB, while for the remainder a substantial portion of any funds is held in money market accounts custodied with a third-party bank, and therefore ringfenced from SVB.
- RTW Venture (RTW) says four private core portfolio companies totaling 1.68% of NAV have some exposure to SVB. After US regulators moved to guarantee all SVB depositors, it does not envisage that this exposure will have a specific impact on the NAV.
Lastly, the team at Polar Capital have produced another timely and informative update on the situation which we suggest that you read – it can be accessed here. Their take is that investors need to be mindful of real estate exposure on bank’s balance sheets and must probably factor in greater regulatory oversight of smaller US banks.
[The main reason that these funds had exposure to SVB was that it specialised in lending to tech businesses. It was probably quite good at that – just not so great at managing its balance sheet. One problem for the sector may be finding another lender who understands and is prepared to take on the technology risk. Securing credit lines might be harder and more expensive in the short term.]
NBPE / HVPE / PIN / HGT / RCP / RTW / PCFT : More SVB updates – fortunately not too serious