SVG Capital Plc, the biggest backer of private equity firm Permira Advisers LLP, said the value of its assets increased 25 percent in the second quarter, boosted by stock price gains for investments including Hugo Boss AG and Galaxy Entertainment Group Ltd.
Net asset value rose to 393.9 pence a share at the end of June, SVG said in a statement today. The company marked up the value of its stakes in Hugo Boss and Valentino Fashion Group by 57 percent to 258.4 million pounds ($418.7 million). The value of SVG Capital’s holding in casino operator Galaxy Entertainment increased 83 percent to 204.1 million pounds.
Fashion retailer Hugo Boss is increasing earnings, boosted by store growth in China and the U.S., while Hong Kong-based Galaxy Entertainment’s share price surged 89 percent during the first six months of the year. SVG Capital, which invests in the companies through Permira, has seen no signs that this month’s selloff in global stock markets is hurting profits.
“We are not yet hearing anything from Permira that would make us concerned about the momentum we have seen in the earnings,” SVG Capital Chief Executive Officer Lynn Fordham told reporters on a conference call. Share prices for Galaxy Entertainment and other holdings haven’t “taken a steep fall.”
SVG Capital rose 3.8 percent to 251 pence at 8:49 a.m. in London trading. The stock has climbed 19 percent this year.
SVG Capital’s increase in net asset value exceeded JPMorgan Chase & Co. analyst Christopher Brown’s estimate by 5 percent.
“These were very good figures,” Brown, who has an “overweight” rating on SVG Capital, wrote in a note to clients today. “It was encouraging to see further strong performance from” investments in Permira’s fourth fund, which had been “written down heavily in the downturn.”
SVG Capital said it may repurchase shares if its stock continues to trade at a “significant discount” to net asset value, according to the statement. The company also said it plans to announce a “long-term” strategy for its business before the end of the year. Fordham said the company remains committed to private-equity investments.
More than 80 percent of SVG Capital’s investment portfolio is allocated to Permira. SVG Capital said most of the 130 percent increase in its net asset value since June 2009 is tied to investments in the London-based private equity firm.