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SVB's major shake-up: Two subsidiaries on the market

After the recent collapse of Silicon Valley Bank, its parent company SVB Financial is trying to find a buyer for other subsidiaries.

Mar 14, 2023

Misc

After the recent collapse of Silicon Valley Bank, its parent company SVB Financial is trying to find a buyer for SVB Securities and its SVB Capital VC division.

Recently collapsed SVB's parent company SVB Financial has released an announcement today stating the intentions to explore strategic alternatives for its other two subsidiaries, SVB Securities and SVB Capital, as well as its other assets and investments. The company also mentioned that both subsidiaries are separate divisions, not part of the collapsed Silicon Valley Bank.

"The members of the holding company's restructuring committee are Eric Benhamou, Tom King, Kay Matthews, Mary Miller, and Kate Mitchell. In addition to exploring potential transactions for the SVB Capital and SVB Securities businesses, the committee will explore all alternatives for addressing the approximately $3 billion of funded debt held by the holding company, which is recourse only to SVB Financial Group and is not guaranteed by the subsidiaries. The holding company is being advised by Centerview Partners LLC, Sullivan & Cromwell LLP, and Alvarez & Marsal as financial, legal, and restructuring advisors, respectively, in conjunction with the committee's activities," says SVB Financial Group.

SVB Capital and SVB Securities are next on the list

SVB Capital is a venture capital and private credit fund platform. It is mentioned that its funds are separate legal entities, distinct from Silicon Valley Bank. "The platform will continue to operate and deliver high-quality services to clients through its existing management team, which has a proven track record of success," added SVB Financial.

On the other hand, SVB Securities is an investment bank offering clients sector knowledge, advisory solutions, and expertise. SVB Financial says that it has maintained its financial and operational independence since its acquisition in 2019. "The resolution proceedings for Silicon Valley Bank will not directly impact the broker-dealer's business operations, which continue uninterrupted under the management of SVB Securities leadership team," said the company today. SVBS focuses on healthcare and technology companies.

SVB Financial is "technically" operating right now, but the company has to sort out what to do with these assets and subsidiaries to prevent further damages. Recently, it sold SVB UK to HSBC for a nominal fee of £1 to prevent the bank from going into government-mandated insolvency proceedings.

Currently, Silicon Valley Bank is under the control of the federal government and is run by a new CEO, Tim Mayopoulos. The bank's future still hangs in the air, but Mayopoulos recently sent a promising letter to clients that signaled a possible reborn.