Loan Note: The SVB credit fund that carries on; L&G’s infrastructure debt impact

The SVB credit fund that fell outside the FDIC process; L&G seeks to make an infra debt impact; plus, Permira's new CLO and the latest industry hires. Here's today's brief for our valued subscribers only. 

They said it

“Short-sellers and deposit withdrawals have brought down SVB, but the problem is systemic. The Fed has been removing chairs and there is no longer adequate seating capacity”

Peter Warburton, chief economist with research group Economics Perspectives, quoted in The Guardian.

First look

Banks on the slide: SVB process raises question over future of funds (Source: Getty)

SVB’s debt funds outside the FDIC process
Silicon Valley Bank, seized by the Federal Deposit Insurance Corporation at the end of last week, was one member of a broader family of entities. The other entities – including SVB Capital, a venture capital and private credit fund platform – continue to operate.

The FDIC seized SVB proper, a subsidiary of the holding company, SVB Financial Group. SVBFG released a statement Monday morning that its board has “appointed a restructuring committee consisting of five independent directors to explore strategic alternatives” both for SVPFG and for SVB Capital, along with other assets.

The release makes the point that SVB Capital is a legal entity outside of the resolution process underway for the bank. Likewise, its funds and the underwriting and investment committee, are not subject to that process.

Private Debt Investor data indicates that SVB Capital has two funds in market: Innovation Credit Income II and Innovation Credit Growth Fund II. Each is a venture debt fund with a North American focus. The growth fund launched in December 2021 and held a first close of almost $617 million in December 2022. The income fund launched in July 2022 and has as yet no reported close.

According to its website, SVB Capital has assets under management of $8.8 billion across all funds.

The FDIC’s move is comparable to its seizure, in September 2008, of Washington Mutual, the one-time savings-and-loan giant. Elements of the WaMu matter may serve as a cautionary tale for all parties to SVB.

In 2008, as in 2023, the holding company (WMI) was left independent once the operating company was seized. But the seizure was such a hasty affair, under emergency conditions less than two weeks after the bankruptcy filing of Lehman Brothers, that there was little attention paid to the question of which assets were actually seized and which were left with WMI.

WMI filed for bankruptcy the day after the seizure, and the issue of the assets still in its possession had to be hashed out within the bankruptcy court. That uncertainty was part of the reason the restructuring could not be completed until March 2012.

Legal & General boosts emerging market debt fund
By acquiring a significant minority stake in ImpactA Global, Legal & General Capital, the insurer’s alternative assets platform, is making an impact in multiple ways, according to affiliate title Infrastructure Investor (registration required).

The first and most direct is its backing of a women-led impact investment advisory firm. Headquartered in London, ImpactA is founded by two JPMorgan veterans – Isabella da Costa Mendes and Victoria Miles.

Indirectly, Legal & General’s investment, financial details of which it declined to disclose, will support ImpactA’s mission of providing debt financing for sustainable infrastructure in Latin America and Africa.

The firm has launched an infrastructure debt fund focused exclusively on emerging markets, that will address three key sectors: clean energy and renewables; sustainable mobility; health and water. The 10-year fund “will provide senior debt alongside official sector creditors and some mezzanine debt”, da Costa Mendes said, adding that the average ticket size will range from between $15 million-$30 million.

But, in addition to the above, we expect Legal & General’s backing had another positive impact: it gave ImpactA’s founders further cause for celebrating International Women’s Day.

And another thing…
With International Women’s Day still very much in mind, we would urge you to continue making nominations for our Women of Influence in Private Markets 2023. The deadline is Wednesday 22 March and you can take part here.


Real estate veteran joins Excellion
Excellion Capital, a London-based investment and advisory firm focused on real estate and asset-backed investments, has appointed ex-AXA and UBS managing director Anthony Shayle as director – real estate.

Shayle previously served for more than 10 years as managing director and head of real estate debt for EMEA (ex-Switzerland) at UBS Asset Management, where his team deployed and managed £1.5 billion (€1.7 billion; $1.8 billion) in assets across UK real estate and real estate debt.

Prior to that, Shayle worked at AXA Real Estate Investment Managers as head of asset management for the UK, Nordics and Benelux, responsible for around €15 billion in assets under management, and launched four new funds with approximately €1.2 billion of equity.

Founded in 2007, Excellion assists borrowers with their real estate finance requirements and makes its own investments. The firm has appointed Shayle to grow its debt advisory business, with a specific focus on assisting borrowers to refinance or restructure existing debts.

Shayle reports to Ashley Marks, head of real estate.

Sedlmayr moves from Golding to Hayfin
Fund manager Hayfin Capital Management has expanded its client coverage capabilities in German-speaking Europe through the appointment of Marco Sedlmayr as head of DACH within the partner solutions team. He will be based in Munich.

Sedlmayr joins from Golding Capital Partners, where he spent five years as managing director and head of institutional clients in Germany and Austria. Prior to that, he worked at Allianz Global Investors as practice leader in the DACH region within the Insurance Business Development EMEA Group.

He was also a senior business development manager at Crédit Agricole Group and JPMorgan.

Eighth CLO in series for Permira
Fund manager Permira Credit has priced Providus CLO VIII, a €398 million European collateralised loan obligation transaction. This marks the eighth CLO from the Providus CLO management platform since it was launched in 2018.

Permira says the Providus platform has a four-pillar investment strategy focused on a credit-led approach; active management of the portfolio; focus on resilient sectors, such as technology and healthcare; and responsible investing.

As with all other CLOs within the platform, Providus VIII has specific ESG eligibility criteria in the documentation, including restrictions on the nature of industries in which the CLO can invest. Permira claims to be the first European CLO manager to have included ESG negative screening language with Providus CLO I in 2018.

The pricing is subject to what the firm describes as “customary closing conditions”.

LP watch

Institution: South Carolina Retirement System
Headquarters: Columbia, US
AUM: $38.2 billion

South Carolina Retirement System has announced $125 million in commitments across two private debt funds, according to minutes from the pension’s March 2023 commission meeting.

Between November and December, SCRS committed $50 million to Fortress Lending Fund III and $75 million to GoldenTree Loan Management III. Both funds will invest in the corporate sector in North America.

The $38.2 billion US public pension’s private equity fund commitments tend to focus on diversified global vehicles targeting buyout or debt returns.

Today’s letter was prepared by Andy Thomson with John Bakie, Christopher Faille and Robin Blumenthal