When Silicon Valley Bank was taken over by the FDIC and First Citizens agreed to buy the bank in mid-March, there was still an unresolved question for the arms of the business that were excluded from the deal: What would become of them? SVB Securities, the investment banking arm acquired by parent company SVB Financial in 2019, tried to quickly orchestrate a deal in March when SVB itself collapsed, but was unable to immediately work out a sale. The branch provides M&A advisory, capital raising, and other investment banking services in the health and tech sectors.
Now, according to SVB Financial’s most recent bankruptcy filings, investment bank Centerview Partners is in the process of orchestrating an auction of SVB Securities, and, according to SVB Financial, “various financial and strategic counterparties globally have expressed interest” in buying the division.
Centerview bankers Sean Carmody, Marc Puntus, Seth Lloyd, and Ryan Kielty are working on the sale, which is expected to be finalized by May 31. According to SVB Financial, because of the amount of interest in acquiring SVB Securities, the process will aim to tease out the highest bidder. To bid for the investment banking arm, buyers have to submit their required bid documents, including a proposal letter and purchase agreement, by May 22 at 5 p.m. ET to be part of the auction.
According to what SVB Financial and the FDIC have laid out, the bidding will likely start on May 25 and be held at the Sullivan & Cromwell offices in Manhattan. Every bidder has to have a representative attend in person or virtually. Once the highest bidder is determined, SVB Financial is hoping the sale will go fast: “Within one business day of the selection of the Successful Bidder, such Successful Bidder shall make a cash deposit that, when aggregated with its Good Faith Deposit, is in an amount equal to the greater of (i) 10% of the Successful Bid or (ii) $10 million, submitted by wire transfer of immediately available funds to an escrow account,” details the bankruptcy proceedings.
While SVB is a shell of its former self, the investment banking arm could still be an attractive buy. When SVB went into receivership and was taken over by the FDIC, SVB Securities became SVB’s “standalone subsidiary” so it would be sold separately. SVB Securities CEO Jeff Leerink was eager to project confidence during the turmoil. In a statement released Saturday, March 11, he said, “We want to assure you that SVB Securities is financially stable and will continue to operate as usual. We remain committed to providing the same level of high-quality products and services that our clients have come to expect from us.” Yet one banker told Coins2Day’s Luisa Beltran amid the meltdown, “There’s nothing to buy there other than some research and product.”
Reports that the investment bank’s management was trying to buy the firm back from SVB Financial surfaced in March while SVB was imploding. Bloomberg reported that Leerink and his team were scouring for funding to buy the business back from SVB Financial.
Time is of the essence for SVB Financial to orchestrate a deal as they continue to bleed talent. Moelis & Co. Hired SVB Securities cohead of investment banking Jason Auerbach at the end of last month, and another 11 senior bankers at SVB Securities joined Moelis along with Auerbach, including senior managing directors Bob Casey and Chris Montgomery.
SVB itself has lost a slew of venture bankers after announcing its new owner, so there is no guarantee that the prospective buyer can persuade talent to stay. But it’s far better than being in limbo—which has been the situation for the investment bankers over the past month.
