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SVB Financial exploring 'strategic alternatives' for $9.5B venture capital unit

SVB Financial Group is reviewing options for its venture capital unit following the failure of Silicon Valley Bank.

A restructuring committee appointed by the SVB Financial board will "explore strategic alternatives" for Silicon Valley BancVentures Inc., or SVB Capital, including the potential sale of the $9.5 billion venture capital and private credit platform, according to a statement released March 13, the same day the Federal Deposit Insurance Corp. transferred Silicon Valley Bank deposits into a bridge bank.

SVB Capital "will continue to operate … through its existing management team," according to the statement. The statement went on to note that capital committed to SVB Capital by investors, as well as portfolio company investments, "are not subject to the resolution process underway for Silicon Valley Bank."

SVB Financial did not respond to a request for further comment. Investors, though, are keeping an eye on developments.

Among the public pension funds invested with SVB Capital is State Board of Administration of Florida, which has both a $1.5 billion private equity portfolio and a $150 million strategic investments portfolio managed by SVB Capital, according to a spokesperson.

"The [State Board of Administration of Florida] continues to monitor and communicate with partners involved with SVB as the matter evolves. All assets under the SBA's purview are healthy and stable," Emilie Oglesby, an external affairs manager at the State Board of Administration of Florida, said in a statement.

SVB Capital has 18 funds currently deploying capital, including the 2019 vintage Strategic Investors Fund X LP, its largest at $1.25 billion, according to S&P Global Market Intelligence data. A successor fund launched in 2021, Strategic Investors Fund XI LP, collected $1.96 billion in investors commitments as of December 2022 and is one of seven SVB Capital funds currently in the market.

The largest deal with SVB Capital involvement was a $260 million round of funding for financial technology business DailyPay Inc. in January. SVB Capital's role in the deal was to provide new term loan funding.

SVB Capital makes direct investments in startups and also manages funds of funds that invest in other venture capital funds. Companies in the technology, media and telecommunications sector make up close to half of its direct investments, which are also concentrated in the financial and healthcare sectors.

Read more about the liquidity crunch and the fallout for the financial sector in our new Issue in Focus.