Silicon Valley Bank(SVB) has released a $2.25 billion share sale struggling big losses

California-based SVB said on Wednesday it planned to offer investors $1.25bn of its common stock and another $500mn in mandatory convertible preferred shares, slightly less diluted for existing shareholders. Private equity organization General Atlantic additionally agreed to buy $500 million of the bank’s common inventory in a separate non-public transaction.

Silicon Valley Bank(SVB) has released a $2.25 billion share sale struggling big losses on its portfolio of U.S. Treasuries and mortgage-backed securities, as the technology-focused lender cashed in on rising interest rates and a slew of U.S. start-ups. Struggling with scarcity. It helped with financing.

The share sale will help shore up the bank’s capital base after it lost about $1.8 billion on sales of about $21 billion, which were classified as available for sale, according to its statement on Wednesday.

As of the end of 2022, the bank had $26.1 billion in available-for-sale securities. The bulk of this was in US Treasuries but also included foreign government debt and mortgage-backed securities. It also holds about $91 billion of securities in a held-to-maturity portfolio.
Shares of SVB were down about 15 percent in after-hours trading in New York.

The bank’s position serving venture capital-backed US tech and life sciences companies has helped it enjoy big growth in recent years as money poured into Silicon Valley start-ups in an era of low-interest rates. is

SVB’s share rate extra than doubled from 2018 to the end of 2021, and its marketplace capitalization peaked at greater than $44 billion.

However, the bank is now suffering from a slowdown in VC funding, cash burn among many of its clients, and losses on investments it made when rates were at record lows.

During the recent tech boom years, SVB’s deposits grew as it took cash from start-ups with VC funding. SVB transferred most of these deposits to the US. Plotted in long-term securities like Treasuries, which are considered safe but are now worth less than the bank bought them because the Federal Reserve has raised rates.

New York-primarily based totally General Atlantic has been active in making huge minority equity investments in public and private agencies through the use of its increased capital funds. It has been a consumer of the financial institution for extra than a decade, in line with a supply acquainted with the matter. It additionally has a record of investing in banks, having been an early supporter of First Republic.

Goldman Sachs and SVB Securities are appearing as book-walking managers for the share sale.

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