SVB Financial Group abandoned a planned equity raise, casting doubt on its efforts to shore up capital as it grapples with losses on its securities portfolio and dwindling deposits from start-ups.
(Bloomberg) — SVB Financial Group abandoned a planned equity raise, casting doubt on its efforts to shore up capital as it grapples with losses on its securities portfolio and dwindling deposits from start-ups.
SVB was planning to raise $2.25 billion across common shares, convertible preferreds and a commitment from General Atlantic in a deal run by Goldman Sachs Group Inc. to raise funds as technology startups facing a cash crunch yanked their funds. That deal is now off the table, according to people familiar with the matter, who asked not to be identified discussing private information.
SVB is in talks to sell itself after those attempts to raise capital failed, CNBC reported. A representative for Goldman Sachs declined to comment. A representative for SVB didn’t immediately respond to requests for comment.
A number of prominent venture capital firms, including Peter Thiel’s Founders Fund, were advising portfolio companies to pull money as a precaution after the firm said it was hit by losses on its securities portfolio and a slowdown in funding at the venture capital-backed firms it serves.
Shares of SVB, the parent of Silicon Valley Bank, plunged as much as 69% in pre-market New York trading on Friday before the shares were halted. The company said it has disposed of substantially all its available-for-sale securities and updated its forecast for the year to include a sharper decline in net interest income.Â
The plan SVB announced on Wednesday included the sale of $1.25 billion of common stock and the sale of $500 million of securities that represent convertible preferred shares. General Atlantic also committed to purchase $500 million of common stock.
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