SVB Financial Group, one of the world’s leading financial services companies, is looking to divest its venture capital investment arm, SVB Securities, and its VC subsidiary, SVB Capital. After years of supporting entrepreneurs and fueling innovation in Silicon Valley, SVB wants to focus its energy on its core banking operations.
SVB Securities and SVB Capital have been quietly seeking buyers. They have already had discussions with several firms, with reports of advanced negotiations with one party. In a call to on-lookers, SVB CEO Greg Becker stated that the shift in focus “will free up resources to focus on technology-driven banking solutions and solutions that drive our core banking services” and “[support] clients’ growth and long-term strategic objectives.”
The intention to sell is not surprising, since SVB is poised to focus more of its resources in other parts of its financial services. SVB Capital was initially launched to offer vertically integrated banking and venture capital solutions, but that strategy has shifted to meet the demands of the rapidly changing industry. In 2017, the company invested in its Data Intelligence and Analytics platform and has looked at more private equity and private credit investments.
SVB Financial knows how valuable SVB Securities and SVB Capital are, and the venture capital unit has seen some hefty returns. In 2017 alone, SVB Capital closed 13 investments from its third fund, receiving a positive 3.2x return on exit.
SVB Financial is confident that its VC investments can yield excellent returns for a new buyer. While a sale of SVB Securities and SVB Capital is not imminent, the sale could be imminent, as SVB is looking to free up resources to focus on its core banking operations. With strong returns, the sale of these two units could spark an exciting new era in the Financial Services industry.
