SVB agrees to sell investment banking arm

SVB Financial Group has entered an agreement to sell its investment banking division, SVB Securities, to a group of some of its own bankers, including Jeffrey Leerink, and backed by funds managed by the Baupost Group.

The bidder group, led by SVB Securities CEO Leerink, will acquire the investment banking business for a combination of cash, repayment of an intercompany note and a 5 per cent equity instrument. 

They will also assume certain liabilities, including “significant deferred compensation obligations”, according to the company.

SVB Securities has been up for sale since Silicon Valley Bank collapsed earlier this year.

“This transaction is a significant milestone in SVB Financial Group's strategic alternatives process,” Bill Kosturos, SVB Financial Group chief restructuring officer Bill Kosturos said.

“The Restructuring Committee and its advisors conducted a disciplined and independent process intended to maximize the value of the business for SVB Financial Group stakeholders. 

“We are confident that the transaction led by the investment bank's current management team will preserve and enhance the value of the business.”

The division will be renamed Leerink Partners as part of the management buyout.

The takeover will happen at the end of the month, pending court approval.

MoffettNathanson, a research business owned by SVB Financial Group, was not part of the sale and will remain part of the group.

“Our firm plays a critical role in the healthcare ecosystem, and this transaction will allow us to continue serving our clients across all corners of the healthcare industry," Leerink said. 

“Our management team's significant capital investment, coupled with key backing we've received from The Baupost Group, is a testament to the long-standing reputation of our firm and our employees and the value of our services to our clients and the industry.”