(Reuters) – Bankrupt U.S. financial giant SVB Financial Group said on Thursday that an affiliate of Pinegrove Capital Partners will acquire its venture capital business SVB Capital.
SVB Financial said a newly formed entity backed by permanent capital from Brookfield and Sequoia Heritage will acquire SVB Capital for a combination of cash and other financial considerations. The financial value was not disclosed.
SVB Financial is seeking bankruptcy court approval and has requested a June 5 hearing.
SVB Capital manages about $10 billion in investments on behalf of about 750 limited partner investors, including public pensions, that have provided capital to investment funds, according to court documents. SVB Financial continues to fight the seizure of nearly $2 billion in cash by U.S. regulators.
“This agreement provides us with a significant cash component and the ability to participate in the future upside potential of our business, and we believe that the structure of SVB Financial Group will be I believe that the value of the interests of our employees will be maximized.” .
In January, SVB Financial announced plans to transfer its remaining venture capital business to a new company backed by creditors. The coalition supporting the transaction includes MFN Partners, Pacific Investment Management Company, Bank of America Securities, J.P. Morgan Securities and King Street Capital, which are responsible for approximately 50% of SVB Financial’s first-priority notes. It owns 48%.
As part of the agreement, Pine Grove and SVB Capital will operate independently, led by their respective existing management teams, with common long-term financial support from Brookfield and Sequoia Heritage.
The transaction is also supported by SVB Financial’s major creditor group and is subject to regulatory approvals and other customary closing conditions, the company said.
SVB Financial filed for bankruptcy last year following the failure of Silicon Valley Bank.
The company announced last year that its SVB Securities and SVB Capital funds and general partner entities were not included in the Chapter 11 filing.
(Reporting by Abhinaya Vijayaraghavan in Bengaluru; Editing by Savio D’Souza and Mrigank Dhaniwala)
