Interim Management Statement

Interim Management Statement for the three months to 30 April 2016

Continued good performance across the portfolio and progress against strategic goals

·     NAV per share of 666p (£1.1bn); 2% increase in the three months

- 13% increase in NAV per share over 12 months

·     Investment portfolio total return of +3% over the three months; 12% over 12 months

- Post-2012 investment portfolio (41% of the net investment portfolio) continues to perform well

- +4% total return over the three months

- Co-investment in TeamViewer written up to 1.8x cost and Visma to 1.2x cost

- Continued realisation activity from the pre-2012 investment portfolio (27% of the net investment portfolio)

- +3% total return over the three months

- Non-core investment portfolio (32% of the net investment portfolio)

- +2% total return over the three months

·     €120m commitment to the Sixth Cinven Fund, a fund focused on European buyouts

- Following continued strong early performance of the Fifth Cinven Fund

·     One new co-investment - TruGreen, alongside CD&R

- £15m co-investment in second lien debt and equity

·     Well positioned to take advantage of investment opportunities

- In the short term, will be making a $125m commitment to a new US based manager, taking our manager relationships to seven

- Anticipate making one further commitment during the course of this year

- Will continue to invest selectively in compelling opportunities across the asset class

·     Strong balance sheet - liquidity coverage of 1.0x uncalled commitments ¹

¹ Including the $125 million commitment to a US based manager

Lynn Fordham, CEO of SVG Capital commented: "We are pleased with the continued performance of our investments. Over £730 million has now been invested or committed to the post-2012 investment programme and our strong balance sheet positions us well to continue to take advantage of further compelling investment opportunities across the asset class."

For further information, please contact:

Alice Kain

Neil Bennett/Tom Eckersley

Copies of the press release and other corporate information can be found on the company website at: http://www.svgcapital.com 

Forward-looking statements - this announcement contains certain forward-looking statements with respect to the portfolio of investments of SVG Capital. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast. 

Top 15 core portfolio companies (66% of gross core investment portfolio) at 30 April 2016

# including Permira Feeder Vehicles

* Combined co-investment and pro-rata share of fund investment

^ Cost adjusted during the period

The 30 April 2016 adjusted net asset value is not a full revaluation, but an update based on a revaluation of 69% of the net investment portfolio based on 31 March 2016 manager valuations, rolled forward for cash flow and foreign exchange movements and quoted share prices, if applicable. The remainder of the investment portfolio has been valued at 31 December 2015 valuations, updated for any cash flow and foreign exchange movements. The Company's assets will be fully revalued at 31 July 2016 in accordance with IFRS and International Private Equity and Venture Capital (IPEV) guidelines, the results of which will be announced in September 2016.

Core investment portfolio (68% of the investment portfolio)

Post-2012 investment portfolio (41% of the investment portfolio)

The portfolio reported a total return of 4%, benefitting from the write-ups of two co-investments, TeamViewer and Visma, both of which continue to report strong earnings growth.

At 30 April 2016, the post-2012 investment portfolio had seven commitments to six managers, four based in the US and two in Europe. The underlying portfolio of 47 companies were valued, in aggregate, at 1.4x cost and an EV/EBITDA multiple of 11.5x. The weighted average net debt/EBITDA of the portfolio was 4.7x.

One new co-investment, TruGreen, was made in the three months taking the number of co-investments in the portfolio to five. TruGreen is the largest North American provider of residential lawn, tree and shrub care services. In December 2015, Clayton Dubilier & Rice (CD&R) Fund IX agreed to fund the merger of TruGreen and the second largest provider of residential lawn services, Scotts LawnService, creating a clear national market leader in garden care services with c. 33% market share.

We believe that the investment in TruGreen plays to CD&R's core strengths and capabilities and SVG Capital has co-invested £15 million in both the second-lien debt (£14 million) and equity (£1 million) of the combined business. SVG Capital will be receiving an annual coupon of 12%, paid quarterly in cash, for the co-investment in the second lien debt.

Pre-2012 investment portfolio (27% of the investment portfolio)

The pre-2012 investment portfolio reported a total return of 3% in the three months, benefitting from an increase in the share-price of NXP Semiconductors and continued realisation activity, with SVG Capital receiving £38 million of proceeds from the partial realisation of NXP in March.

Non-core investment portfolio (32% of the investment portfolio)

The non-core portfolio generated a total return of 2% in the three months. The majority of the non-core investments are held in the Diamond fund of funds programme which continue to deleverage. We expect distributions from these funds to accelerate in the coming 12 to 24 months.

New commitments

Following the strong early performance of the Fifth Cinven Fund, SVG Capital has made a €120 million commitment to its successor fund, the Sixth Cinven Fund. This commitment builds on our partnership relationship with the firm and takes total commitments to Cinven funds to €220 million.  The investment strategy for the Sixth Cinven Fund is consistent with previous Cinven funds and will focus on six core sectors: business services, consumer, financial services, healthcare, industrials and TMT. 

Calls and distributions

In total, £46 million of distributions were received in the quarter, mainly driven by the partial realisation of NXP Semiconductors in March 2016. Against this, £26 million of calls were paid funding two new investments, the largest of which, TruGreen, was a co-investment alongside CD&R Fund IX.

Financial review

At 30 April 2016, the Company had net cash balances of £288 million (after deduction of the convertible bonds, which mature in June 2016). Uncalled commitments were £417 million at 30 April 2016, which will rise to £502 million after the forthcoming $125 million commitment to a US based manager. Including the undrawn bank facility, the Company will have liquidity coverage of 1.0x uncalled commitments².

² Including the $125 million commitment to a US based manager

Foreign exchange

In aggregate, foreign exchange had a positive impact on investment portfolio of £14 million over the period with the positive impact of the Euro/Sterling exchange rate more than offsetting the 3% negative movement of the US dollar against Sterling.

Share buy-backs and share capital

The Company has continued its share buy-back programme, with 3 million shares bought back during the period, at a weighted average share price of 492p. Since 30 April 2016, a further 316,000 shares have been bought back (as at 23 May 2016) at a weighted average share price of 523p. At 23 May 2016, SVG Capital had 171,789,499 issued ordinary shares admitted to trading on the Official List of the London Stock Exchange, of which 14,790,393 were held in treasury and 142,922 were held by the Employee Benefit Trust.

Outlook
Our investment portfolio has again performed well. In particular, we are pleased with the continued good performance of the post-2012 investment portfolio and especially our co-investments, with both TeamViewer and Visma written up following continued strong earnings growth. Our managers continue to show investment discipline against the backdrop of a competitive environment for new private equity deals and volatility in financial markets, with the investment pace across our portfolio remaining well below historic norms.

Despite the ongoing uncertainty in the macroeconomic, geopolitical and financial market outlook, we remain confident in our managers' ability to generate attractive returns through the cycle through a combination of investment discipline, operational capabilities and clear strategies for growth. In addition, our balance sheet positions us well to both build our portfolio of commitments to leading managers and to continue to take advantage of compelling investment opportunities across the asset class.