HPS, Oaktree Among Firms Pitching Deals for Trapped SVB Deposits

HPS Investment Partners and Oaktree Capital Management are among investment firms that are offering to provide financing to companies with cash trapped at Silicon Valley Bank, according to people with knowledge of the matter.

(Bloomberg) — HPS Investment Partners and Oaktree Capital Management are among investment firms that are offering to provide financing to companies with cash trapped at Silicon Valley Bank, according to people with knowledge of the matter.

Some are offering to buy claims on the deposits of SVB clients, including startups and publicly traded companies, at discounts of between 60 cents to 75 cents on the dollar, said the people, asking not to be identified because the discussions are private.

Others are offering liquidity to private equity and venture capital firms whose portfolio companies are unable to access cash at SVB at around 80 cents on the dollar in exchange for a guarantee from the fund that owns the companies, according to one of the people.

Talks are in the early stages, and prices could change, said the people.

Representatives for Oaktree and HPS declined to comment. Semafor earlier reported that hedge funds including Oaktree are offering to buy the deposits of startups.

The discussions follow the swift collapse of Silicon Valley Bank, once a darling of the California financial system. Its downfall has left companies such as Roku Inc., LendingClub Corp. and Eiger BioPharmaceuticals Inc. unable to access deposits tied up in the bank, while some firms desperately need cash to meet urgent deadlines for business operations such as payroll.

Some of the companies with cash stuck at SVB face a stark choice: Strike a deal at a discount to guarantee they have cash now, or wait out the uncertainty of what they’ll potentially get back down the line. US regulators overseeing the emergency breakup of SVB Financial Group are racing to sell assets and make a portion of clients’ uninsured deposits available as soon as Monday, Bloomberg has reported.

Read more: FDIC Races to Start Returning Some Uninsured SVB Deposits Monday

In the meantime, Michael Cagney, founder and CEO of Figure Technologies, wrote in an email sent on Saturday to Wall Street firms and seen by Bloomberg, that his company is exploring putting together a marketplace for deposit receipts, and has the capital to do so. The plan is to have something in place ahead of Wednesday’s payroll, according to the email and a post on his LinkedIn profile.

That could potentially be an alternative for companies that are considering deals with hedge funds.

Cagney declined to comment.

–With assistance from Hema Parmar and Michael Tobin.

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