SVB Financial mulls sale of FoF with stakes in Accel, Index, Sequoia

SVB Financial announced Monday it formed a restructuring committee on options for its business lines, including SVB Capital, a $9.5bn fund of funds manager.

SVB Financial Group, the holding company of Silicon Valley Bank, is exploring strategic options for its various business lines, including a sale of its $9.5 billion funds-of-funds business that includes limited partner positions in funds.

SVB Financial announced Monday it formed a restructuring committee on options for its business lines, including SVB Capital and SVB Securities and other investments, none of which are part of Silicon Valley Bank. The commercial bank was taken over by the Federal Deposit Insurance Corp Friday amid a run of depositors looking to exit.

The company is working with Centerview Partners, Sullivan & Cromwell and Alvarez & Marsal on the process. “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, which is recourse only to SVB Financial Group and is not guaranteed by the subsidiaries,” the company said.

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The fund of funds platform, which includes commitments to venture funds as well as private credit, continues to operate, the company said Monday.

There is a lot of interest in SVB Capital, according to someone familiar with the situation. “I think everyone is looking at it,” the source said.

SVB Capital has backed venture funds from Accel, Bessemer Venture Partners, Felicis Ventures, Frazier Healthcare Partners, Index Ventures, Sequoia Capital and Spark Capital, among others, according to its website. “SVB Capital is one of our most value-added limited partners,” Doug Leone, general partner at Sequoia Capital, states in a testimonial on the website.

The firm’s most recently closed fund of funds, Strategic Investors Fund X, raised $1.25 billion in 2021. That vehicle generated a TVPI of 1.07x and IRR of 8.40 percent as of June 30, 2022, according to the Florida Retirement System Trust Fund.

SVB Capital began raising SVB Strategic Investors Fund XI last year and had collected about $1.9 billion as of December, according to SEC filings. Fund XI expected to commit to 15 managers, making up around 85 to 90 percent of the portfolio, with the remaining 5 to 15 percent allocated to emerging managers, according to an investment memo for the San Francisco Retiree Health Care Trust Fund. The fund mostly targets early stage managers, as well as expansion and growth, the memo said.

The firm also was raising a parallel pool, SIF-Plus, targeting $500 million for commitments to growth and late-stage venture funds and co-investments, the memo said.

SVB Capital managed more than $9.5 billion as of February on behalf of third-party limited partners and, on a limited basis, SVB Financial Group, according to the bank’s annual report.

SVB Financial also holds LP positions on its balance sheet, which will also be part of the mix, sources said.

Additional reporting by Lawrence Aragon