Britain's SVG Capital rejected a hostile bid by U.S. rival HarbourVest on Friday, saying the $1.35 billion offer undervalued the listed private equity firm, and it was in talks with other potential suitors.
Investors have been frustrated for years by Britain's listed private equity sector, which has traded at a discount to the value of its assets, prompting a coup by activist investor Edward Bramson at Electra Private Equity.
The prospect of a rival bid for SVG saw its shares jump past HarbourVest's 650 pence a share final offer, which already has the support of a large chunk of SVG's investors, and by 0738 GMT, SVG stock was trading up 4% at 676 pence a share.
SVG said the HarbourVest bid—at a discount of 11.5% to the fund's July net asset value, and a greater discount to the value of the investment portfolio—undervalued both the company and its assets.
"The latest strong performance builds on the double-digit annual growth of the past six years. In particular, the investments made under the new strategy have performed well," it said in a statement with results for the six months to end-July.
The response comes days after Boston-based HarbourVest, which manages $42 billion, made public its bid. At the time, SVG asked investors to do nothing until it had filed its results.
Posting a 12% increase in the net asset value per share to 735 pence on Friday, helped by a "significant" currency boost, and a total return from its investment portfolio of 13%, SVG again advised investors to sit tight.
"The Company has received approaches from a number of credible parties, which... may lead to an offer competing with HarbourVest and could deliver SVG Capital shareholders superior value," SVG Chief Executive Lynn Fordham said.