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SVG raises E400m from fixed income markets for investment in private equity

SVG Advisers, the private equity investment company formerly known as Schroder Ventures, has raised E400m in bonds and preferred equity in a rare example of a private equity fund raising capital in advance of an acquisition from fixed-income investors.

'SVG Diamond is one of the few investment vehicles to have successfully raised capital from the international fixed income markets for investment in private equity funds,' said Andrew Williams, chief executive of SVG Advisers. 'The innovative structure allows private equity fund of funds to tap the fixed income market on an extensive basis, thus providing an attractive cost of capital.'

The vehicle, to be called SVG Diamond, has raised the capital through an innovative collateralised fund obligation (CFO), comprising E260m of investment grade bonds and preferred equity shares representing commitments of E140m.

SVG Diamond will initially purchase a secondary portfolio of interests in approximately 20 private equity funds and will make commitments to around 40 primary private equity funds, diversified by vintage year, geography and manager. The CFO will predominately be focused on buy-outs in Western Europe and the US and will have an over-commitment facility of 133 per cent, allowing a target investment capacity of E533m.

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