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SVG Capital agrees in principle with entire investment portfolio sale to consortium including Goldman unit

SVG Capitalplc said Oct. 6 that its board has in principle to the keycommercial terms of a proposed sale of its entire investment portfolio to fundsmanaged by Goldman Sachs Asset Management's Alternative Investments &Manager Selection Group and certain investment entities managed by the CanadaPension Plan Investment Board for approximately £747.8 million, subject toadjustment for calls and distributions from July 31.

As such, SVG Capital's board no longer intends to recommendto shareholders a previousproposal by Pomona Capital and Pantheon Ventures regarding thesale of 50% of thecompany's investment portfolio for £379 million.

The offer price by the Goldman/CPPIB consortium represents a6.8% discount to the value of the investment portfolio as of July 31. IncludingSVG Capital's current net cash resources, and net of all estimated costs, theoffer price equates to approximately 680 pence per share.

The board believes the sale of the entire investmentportfolio and wind-down of the company will generate better value, compared tothe final 650 pence-per-share cash offer tabled by HarbourVest StructuredSolutions III LP, an investment vehicle indirectly owned by .

SVG Capital said approximately £1.06 billion would bereturned to its shareholders through a series of tender offers and the winding-upof the company, should the sale complete on agreed terms. SVGCapital is in advanced discussions to formalize the proposed deal with theGoldman group and CPPIB. It is anticipated that an asset transfer agreementwill be signed shortly.

Specifically, the company will launch a £450 million tenderoffer before 2016-end at 680 pence per share, a £300 million offer inJanuary/February 2017 at 680 pence per share and a £270 million offer in March2017, also at 680 pence per share. Final capital distribution in the winding-upprocess is expected in the second quarter of 2017.

Completion of the deal will be conditional on HarbourVest'soffer lapsing or being withdrawn, as well as on shareholder approval. It is anticipatedthat the shareholder meeting will take place in early December.

Both the Goldman Sachs Group Inc. business and CPPIB haveconfirmed that they do not intend to make an offer for SVG Capital.

SVG expects the costs associated with its response toHarbourVest's offer, the tender offer series and the wind-down to amount toapproximately £33 million. The company will also pay a break fee and costreimbursement of £2.5 million to Pomona Capital and Pantheon Ventures, plus anyapplicable VAT.

SVG Capital's board intends to recommend that shareholdersapprove the deal with Goldman/CPPIB. The company noted that CollerInternational Partners V-A LP, its largest shareholder with a 26.6% stake, hasaccepted the offer by HarbourVest, which holds an 8.5% stake in SVG Capital.

Meanwhile, Legal & General Group Plc and , which own stakes in SVGCapital of 4.5% and 2.8%, respectively, have withdrawn their support ofHarbourVest's offer for SVG Capital, CityA.M. reported Oct. 5. The withdrawal means HarbourVest no longer has publicsupport of more than 50% of SVG Capital's institutional shareholders.

SVG Capital shareholders reportedly had until 1 p.m. Londontime on Oct. 6 to accept HarbourVest's offer.