• Silicon Valley Bank (SVB) is reportedly seeking external acquisition after its efforts to raise over $2 billion in capital have failed.
• The bank’s stock plummeted 60% on Thursday after it announced a planned total raise worth $2.25 to “strengthen its financial position” and “reposition” its balance sheet.
• SVB also sold “substantially all” of its Available for Sale securities portfolio with the intention to reinvest the money, which it said would realize an earnings loss of $1.8 billion.
Silicon Valley Bank in Talks to Sell
The U.S. tech banking giant Silicon Valley Bank (SIVB) is reportedly seeking external acquisition after its efforts to raise over $2 billion in capital have failed. Shares in the bank were down 62% in pre-market trading on Friday, for which trading has now been halted. According to CNBC’s David Faber, Silicon Valley Bank has “hired advisors to seek a sale,” a result which is “not unexpected.”
Capital Raise Failed
The bank’s stock plummeted 60% on Thursday after it announced a planned total raise worth $2.25 to “strengthen its financial position” and “reposition” its balance sheet. This included plans to sell $1.25 billion in common stock, $500 million of convertible preferred shares, and another $500 million common stock sale to General Atlantic (which was contingent on the success of the previous common stock sale).
Available For Sale Portfolio Sold
SVB also sold “substantially all” of its Available for Sale securities portfolio with the intention to reinvest the money, which it said would realize an earnings loss of $1.8 billion. PayPal co-founder Peter Thiel’s Founders Fund advised companies to withdraw money from SBV yesterday over concerns surrounding this move by SVB Bank Management LLC, though no evidence was presented that any such withdrawals had taken place as yet .
Potential Buyers?
Silicon Valley Bank apparently has some potential buyers however a deal is far from guaranteed at this stage; further details remain unclear at this point as negotiations are still ongoing between interested parties and potential buyers are not known as yet .
Concerns Over Money Withdrawal
PayPal co-founder Peter Thiel’s Founders Fund advised companies yesterday to withdraw their money from SVB due concerns surrounding this move by SVB Bank Management LLC; however there is still no evidence that any such withdrawals have actually taken place as yet .