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SVG Capital: No fund commitments for 2 years

The London-listed fund of funds has decided it will continue life as a listed investment trust, but will not be making any meaningful new fund commitments for up to two years.

SVG Capital, the London-listed investment trust with strong ties to buyout group Permira, is to maintain its listed status and its strategy of private equity investment, but is unlikely to make any significant new commitments for the next 12 to 24 months. The decision is the result of a five-month strategic review, whose findings were released today.

Any new commitments will be “minimal and limited to existing funds” or to new SVG Advisers funds.

The world is going through a period of major economic change, and much of the outcome remains unclear.

SVG Capital statement

SVG Advisers, the listed trust’s wholly-owned manager of third party fund of funds, will have a separate management team to that of SVG Capital. The board is currently in the selection process for the roles of chief executive for each entity.

Two SVG Capital board members – Damon Buffini, chairman of Permira, and Anthony Habgood, the newly appointed chairman of publishing group Reed Elsevier – have stepped down from the board.

The firm said that its relationship with Permira is not expected to “change materially” in the short term, although the firm's investment strategy may be adjusted in the future. “The world is going through a period of major economic change, and much of the outcome remains unclear,” the firm said in a statement. SVG’s assets are 75 percent invested in Permira-managed buyout funds.

The investment trust will also change its policy to allow shareholders to opt to either receive a cash payout when distributions are generated or to have the money reinvested in the private equity asset class. This, however, will not be instated until distributions are a more realistic prospect.

The changes are the result of a wide-ranging review instigated in December last year and conducted by investment banks JPMorgan Cazenove and Hawkpoint. It was prompted by concerns that rapidly deteriorating economic climate would leave the investment trust unable to honour its private equity fund commitments.

At that time Permira made the unprecedented move of allowing investors in its latest buyout fund – including SVG Capital – to scale back commitments by 40 percent to its fourth fund. Similar moves have since been made by other managers such as TPG, Candover and Trilantic Capital (formerly known as Lehman Brothers Merchant Banking).