UK - Listed private equity fund of funds SVG Capital has posted a decline in net assets per share of 64.3%, in what the company's chairman Nicholas Ferguson called "the most difficult period in the company's history".
He explained: "This, coupled with the sharp decline in the global economic environment towards the end of 2008 and the ensuing impact this had on the outlook for the portfolio companies, has led to a number of valuations being written down significantly, outweighing the positive impact of foreign exchange, realisations of Jet Aviation and Debitel and the write-up of TDC."
The SVG chairman saod the collapse of Lehman Brothers combined with a worsening economic environment had two significant potential implications for the company.
First, he said, the normal pattern of calls and distributions would not apply.
He said: "Historically recessions have seen a low incidence of both calls and distributions. We foresaw a long period with few, if any, distributions, while at the same time, given the availability of uncalled private equity money and the likelihood of many companies being equity starved, we could see the potential for rising equity investments starting in the latter part of 2009."
Second, he said the dramatic fall in public market comparable earnings multiples caused major falls in value, given the leveraged nature of SVG's investments.
He added this could have in turn affected the company's ability to meet its loan to value covenant ratios for its credit lines, which would be needed to support its outstanding commitments, including to Permira IV [Permira advises most of the private equity funds SVG is invested in].
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