Private Equity Firms Eye Slice of $74 Billion SVB Loan Book
(Bloomberg) -- The world’s largest private equity firms are interested in snapping up a book of loans held by Silicon Valley Bank, as investors begin to circle the assets of the California lender that collapsed last week.
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Apollo Global Management Inc., Ares Management, Blackstone Inc., Carlyle Group Inc. and KKR & Co. are among those looking to buy pieces of Silicon Valley Bank, according to the people, who asked not to be identified discussing confidential information. The firms are conducting due diligence on the loan assets ahead of any potential offers, they said.
The bank had $73.6 billion of loans as of Dec. 31, 2022. The size of the loan book that the private equity firms are interested in couldn’t immediately be determined. Blackstone is also looking at other assets it may purchase from the bank, one of the people said.
Representatives for Apollo, Ares, Blackstone, Carlyle and KKR declined to comment.
The Federal Deposit Insurance Corp. took over Silicon Valley Bank on Friday, after its long-established customer base of tech startups began withdrawing deposits en masse.
At the end of last year, the bank had more than $175 billion in mostly uninsured deposits and $209 billion in total assets. Many of those assets were long-term bonds the bank had to sell at a loss due to rising interest rates. Other assets include loans to early-stage and growth companies, as well as credit for wealthy entrepreneurs and venture capital funds.
The loan portfolio is seen as an attractive buy and was not a contributing factor in the bank run that caused Silicon Valley Bank’s demise, the people said. A representative for SVB didn’t immediately return a request for comment.
“It has a long-established track record in the sector which supports its expertise, conservative underwriting, and better than peer asset quality performance,” ratings agency Moody’s Investors Service said last week as it downgraded the debt of the SVB Financial Group, the bank’s parent company.
The FDIC held an auction for the bank over the weekend, but no buyer emerged. Instead, the regulator created a bridge bank to house SVB’s deposits and has promised to make all of its customers whole. The FDIC declined to comment.
SVB Financial, the former holding company of Silicon Valley Bank, is also exploring the possibility of selling off other units including SVB Capital and SVB Securities.
Read more: Billionaire Charles Schwab’s Fortune Is Slammed by SVB Fallout
--With assistance from Allison McNeely.
(Updates to add Carlyle interest from second paragraph.)
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