LONDON Britain's SVG Capital (SVI.L) rejected a hostile bid by U.S. rival HarbourVest on Friday, saying the $1.35 billion offer undervalued the listed private equity firm and that it is in talks with other potential suitors.
Investors have been frustrated for years by Britain's listed private equity sector, which has traded at a discount to the value of its assets, prompting a coup by activist investor Edward Bramson at Electra Private Equity (ELTA.L).
The prospect of a rival bid for SVG sent its stock above HarbourVest's 650 pence per share final offer, which already has the support of a large chunk of SVG's investors. By 1517 GMT the shares were up 4.4 percent at 679 pence.
SVG said the HarbourVest bid -- at a discount of 11.5 percent to the fund's July net asset value and a greater discount to the value of the investment portfolio -- undervalued both the company and its assets.
"The latest strong performance builds on the double-digit annual growth of the past six years. In particular, the investments made under the new strategy have performed well," it said in a statement with results for the six months to July 31.
The response comes days after Boston-based HarbourVest, which manages $42 billion, made its bid public. At the time, SVG asked investors to do nothing until it had filed its results.
On Friday HarbourVest said it continued to believe that its offer was offered full value to SVG shareholders and urged them to accept, given the absence of a higher cash offer.
Posting a 12 percent increase in the net asset value per share to 735 pence on Friday, helped by a "significant" currency boost, and a total return from its investment portfolio of 13 percent, SVG again advised investors to sit tight.
"The Company has received approaches from a number of credible parties, which... may lead to an offer competing with HarbourVest and could deliver SVG Capital shareholders superior value," SVG Chief Executive Lynn Fordham said.
(Editing by Alexander Smith and David Goodman)