Shares in London-listed biotech, fintech and private equity funds listed have stabilised after stating their limited exposure to the collapse of Silicon Valley Bank (SVB) and its UK subsidiary.

Augmentum Fintech (AUGM ), the £280m investor in early-stage financial services companies, was one of the biggest fallers among investment companies making statements this morning.

Amid a widespread weakening of financials that drove the FTSE 100 over 2%, its shares slid 4% to 91p, having declined 15% in the past week to close on a wide 40% discount to net asset value (NAV) on Friday that reduced its market value to £168m. 

The investment trust reassured investors it had ‘no direct exposure to SVB UK, nor its parent company in the US’ or any other SVB entity. It said it held £40m cash, which excluded the £22.8m due from the sale of Cushon to Natwest (NWG) in the second quarter.

This follows the announcement that after an intervention by the Bank of England HSBC has bought the UK arm of SVB (SVBUK) while US regulators have ensured all the deposits at the US parent. Shareholders in SVB have been wiped out and bond holders that lent to it face heavy losses. 

However, Augmentum said two of its 25 portfolio companies did have accounts with SVB UK. ‘These two companies also have sufficient funds at other UK tier 1 banks to continue trading while a resolution is sought,’ it said in a statement prepared before the Bank of England arranged the sale of SVB UK to HSBC.

‘Together the two companies represent 2.6% of the company’s NAV of £292.1m and neither are in the company’s top 10 portfolio holdings.’

IP Group (IPO), the investor in science and tech startups backed by Liontrust, Baillie Gifford and Schroders, also slipped 3% to 54p, taking its one-week decline to 15%.

It said it had sufficient liquidity of more than £500m to support the small number of portfolio companies that may require short-term support. It also said it had no direct deposits, credit facilities or other relationships with Silicon Valley Bank or SVB UK.

BioPharma Credit (BPCR ), the £1bn lender to US drugs companies, stated it did not hold deposits or other investments in SVB. Fund manager Pharmakon Advisors said it had ‘consulted with all of the company’s borrowers and is pleased to reiterate that they also have no significant exposure to SVB’. The 7%-yielding dollar-denominated shares remained broadly unchanged at 96 cents on a 5% discount to net asset value (NAV).

Having slipped more than 6% in the past five sessions, shares in Syncona (SYNC ) eased 1% to 148p and a 22% discount after the £1.3bn life sciences portfolio said it had a small amount of cash with SVB UK, ‘equating to less than 0.4% of its capital base of £653m and 0.2% of NAV’.

It said its investee companies had a ‘range of banking relationships’ that included SVB and SVB UK and Syncona’s ‘estimated indirect exposure across its portfolio is 6% of NAV, with all but a de minimis amount with SVB UK’.

The investment company’s board said it had a ‘strong capital base to support our companies operationally if required’.

Mercia Asset Management (MERC), an AIM-listed investor in unquoted bioscience firms, also distanced itself from SVB entity saying all of its £39m of balance sheet cash was held with Barclays (BARC), Lloyds (LLOY), HSBC, and Santander.

However, it did confirm that a ‘small number of the group’s direct investment portfolio have bank accounts with SVB’ but said the ‘credit balances are relatively small due to their scale and cash burn rates’. In volatile trading its shares shed 3.5% to 26.5p.

‘Mercia therefore has sufficient liquidity to support these investees, should a short-term need arise,’ the firm said.

Mark Payton, Mercia chief executive, said its business model was ‘developed specifically to only invest in businesses with relatively low capital needs’.

‘Our interconnected pools of capital and debt-free, highly-liquid balance sheet ensures that investee company liquidity risk can be mitigated,’ he said.

Apax Global Alpha (APAX ), a £1.1bn private equity fund, softened 0.4% to 169.4p after an initial review showed its SVB ‘appears to be limited’. While a small number of portfolio companies had bank accounts at SVB, most held small sums of cash and there was no exposure to SVB in the Apax funds in which the company invests.

EFJ and Polar Capital financials fall

Numis Securities analyst Gavin Trodd said such statements were useful but further disclosures from investment companies were likely.

‘The most direct exposure in investment companies sector is likely to be EFJ Investments (£75m market cap), which lends to regional US banks, while Polar Capital Global Financials (PCFT ) has exposure to banks (about 55% of the portfolio) and has seen its shares fall about 8% since mid last week,’ Trodd said.

EFJ Investments (EFJI), a structured finance fund run by Peter Stage and Hammad Khan, fell 4.8% or 6p to 118p with its 32% share price discount likely to have widened.

Polar Capital Global Financials (PCFT) retreated 4.3% to 143p, having ended last week on a 5.5% discount.

VCTs in the clear so far 

Octopus Investments, a leading VCT manager, said it did not bank with SVBUK and its potential insolvency would not have had a ‘material impact’ on Octopus’ operations.

‘We undertook a thorough review of all the investments across all Octopus Investments venture capital funds to assess how many are impacted by SVB’s collapse. As of late Sunday 12 March, of our 278 portfolio companies, less than 12 would have had immediate cash flow needs as a result of funds being tied up with SVB.’

Will Fraser-Allen, chair of the Venture Capital Trust Association (VCTA), welcomed the intervention: ‘HSBC’s acquisition of Silicon Valley Bank (SVB) will provide much needed reassurance to the UK tech sector and all affected businesses held within VCT portfolios regarding their ability to access deposits.’