Collapse of Silicon Valley Bank and NGS Super's exposure13 Mar 2023 3 min read
On Friday we received the unfortunate news of the collapse of the Silicon Valley Bank (SVB) in the United States. SVB are one of the primary banking institutions for the private equity sector and is the 16th largest bank in the US. This collapse has sent shock waves through both private and public markets, and is symptomatic of the unintended consequences of tightening monetary policy.
What do we know today?
NGS has been in discussions with both our domestic and international managers to identify our indirect exposure via our private equity investments. Overall, the exposure is low, with the majority of managers having no accounts with SVB, with only a handful having exposure via their underlying portfolio companies who have deposits or lines of credit with SVB. We are yet to have a clear picture of the extent of exposure of those portfolio companies (as a number where able to complete a partial or full redemption prior to the collapse).
Latest news from US Federal Reserve
This morning we welcomed the announcement from the United States Federal Reserve to protect deposits held with SVB. The Federal Reserve announced that Depositors will have access to all of their money starting Monday, March 13. No losses associated with the resolution of SVB will be borne by the taxpayer.
We are therefore optimistic that the deposits will be recovered across our PE portfolio companies.
Public Market Impact on Diversified Option
SVB is listed on the Nasdaq and the Fund has exposure via Blackrock and our S&P Financial position within our international share sector. This equity will be fully written off and we estimate the direct impact on the MySuper Option is less than 0.011% (~1.1bps). We are closely monitoring the impacts on the banking system and for our investment managers. We are in close communication with investment partners to ensure that both the risks and the opportunities of this event, are weighed up in the best financial interest of members.
If you have any further concerns please reach out to NGS on 1300 133 177.