SVG raises second CFO

SVG Capital has raised €500m through a collateralised fund obligation (CFO) of private equity funds. SVG Diamond II will focus on buyouts, and at closing had agreements in place to buy a portfolio of 14 funds. The CFO is made up of €325m of unwrapped investment grade bonds, issued in four tranches, and €175m of preferred equity shares.

The fund portfolio is valued at €62m and the firm plans to acquire both secondary and primary fund positions in the future, in the US and Western Europe. It also has an over-commitment facility of 140%, pushing up the total investment capacity to a potential €700m.

Andrew Williams, CEO of SVG Advisers, the investment adviser to SVG Capital, said: “The buyout focus of the portfolio is an appealing characteristic of SVG Diamond II with what we believe will be ultimate exposure to approximately 500 mature companies. The use of secondary interests and manager diversity are also key to the portfolio construction. Furthermore, the pioneering structure allows SVG Diamond II to tap the fixed income market on an extensive basis, thus providing it with an attractive cost of capital. As with SVG Diamond, investors are exposed to a low event risk and a corresponding high credit quality at the AAA, AA and A bond level.”

SVG Diamond II is the first ever follow-on private equity securitisation vehicle, its predecessor fund raised €400m though a CFO in October 2004.