• Silicon Valley Bank (SIVB) is reportedly seeking external acquisition after its efforts to raise over $2 billion in capital have failed.
• The bank’s stock plummeted 60% on Thursday after it announced a planned total raise worth $2.25 to „strengthen its financial position“ and „reposition“ its balance sheet.
• PayPal co-founder Peter Thiel’s Founders Fund advised companies to withdraw money from SBV yesterday over concerns surrounding the potential sale of the bank.
Silicon Valley Bank in Talks of Sale
Silicon Valley Bank (SIVB), a U.S tech banking giant, is reportedly seeking an external acquisition after failing to raise over $2 billion in capital. Shares in the bank were down 62% in pre-market trading on Friday and trading has been halted since then. According to CNBC’s David Faber, Silicon Valley Bank has hired advisors for a potential sale, which was not unexpected due to the inability to raise capital and funds leaving the bank rapidly.
Planned Capital Raise
The bank’s stock plummeted 60% on Thursday after it announced plans for a total raise worth $2.25 billion with the aim of strengthening its financial position and repositioning its balance sheet. This included plans to sell common stock valued at $1.25 billion, convertible preferred shares valued at $500 million, and another common stock sale amounting to $500 million that was contingent upon success of previous sales. SVB also sold substantially all of their Available for Sale securities portfolio with the intention reinvestment but this resulted in an earnings loss of 1.8 billion dollars.
Advice from Founders Fund
PayPal co-founder Peter Thiel’s Founders Fund advised companies yesterday to withdraw money from SVB due to concerns regarding potential sale of the company as well as other risks associated with investing in them at this time.
Implications of Potential Sale
If Silicon Valley Bank finds an acquirer, it will be interesting to see who they decide partner with and what implications such a partnership would have for both parties involved as well as other banks operating within similar spaces across America and around world more broadly speaking .
Conclusion
It remains unclear if Silicon Valley Bank will find an acquirer or if their efforts towards raising capital will become successful but one thing is certain: investors should proceed with caution when considering investing any part of their portfolios into SVB until more information is made available about their future plans going forward .
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