Silicon Valley Bank To Sell $9.8 Billion Venture Capital Arm For $340 Million, A Year After $1.8 Billion Collapse

After the collapse of Silicon Valley Bank (SVB), the parent company, SVB Financial Group, is nearing the sale of its venture capital arm, SVB Capital. 

SVB Capital, which was not included in the sale of SVB’s lending and wealth management units to North Carolina-based First Citizens Bank, has continued to manage approximately $9.8 billion in assets for its limited partners under its parent company.

Now, it is in the final stages of being purchased by a new entity backed by Brookfield and Sequoia Heritage. This deal, however, is still subject to bankruptcy court approval.

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Court documents filed on May 2 indicate that the sale will be executed for an upfront cash price of $340 million and a termination fee of $15 million. The transaction marks a significant step in the aftermath of SVB’s collapse, potentially providing a stable future for SVB Capital and its stakeholders.

Earlier in January of this year, the company announced that retaining the SVB Capital business as a part of SVB Financial Group would result in superior value-creation opportunities.

"We believe that retaining SVB Capital under a reorganized company is the best path forward to maximize its value in the current environment," said William Kosturos, Chief Restructuring Officer of SVB Financial Group. "SVB Financial Group and its creditors recognize the strong foundation on which SVB Capital has been built, thanks largely to Aaron, Sulu and Beau’s outstanding leadership and partnership, with the significant support and contributions of the entire SVB Capital team. 

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Aaron, Sulu and Beau’s vision for the future of this business is closely aligned with our creditor group, and all parties are focused on preserving the value of the business, meeting obligations to partners and positioning the platform to capitalize on future opportunities."

However, it is now evident that the company believes that selling the fund is a better way forward.

SVB Capital invests in fund managers and private technology and life science companies throughout the innovation economy worldwide. 

The successful sale of SVB Capital will ensure a more secure and prosperous future for its investment operations and the broader financial community.

SVB’s downfall a year ago sent shock waves through the financial community, highlighting the vulnerabilities in the banking sector’s exposure to interest rate risks. Since its acquisition, the company has recovered and continues working with startups to regain its trust. 

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