SVB Financial Group acquired the investment banking division (SVB Securities) for $280 million four years ago. Now, it has received approval from the US bankruptcy court to resell it. This is a further part of the proceedings related to the bankruptcy of Silicon Valley Bank (SVB) in the first half of the year.

Although initial media reports suggested that the deal was worth $100 million, information provided to Finance Magnates by Leerink Partners spokesperson shows that this is not the purchase price. Instead, it is the amount investors invest in the company to pay the case consideration, and financial and legal advisors' fees.

SVB Securities Returns to Leerink's Hands

SVB was one of the American banks that declared bankruptcy in March, leading to stress spilling over into the banking sector worldwide. Now, it is selling off parts of its assets, and according to the latest court decision, it can resell the investment banking division.

The buyer of the unit is Jeff Leerink, the creator of the original division. After SVB Financial took it over a few years ago, he remained in his post and was responsible for its further development. However, SVB has collapsed and Leerink expressed a desire to buy back his business with the support of the Baupost Group and executive team members. Although Silicon Valley Bank's story did not end happily, for Leerink, the turn of events certainly proved beneficial.

Although the decision was first announced back in June, the American bankruptcy court initially did not want to allow the sale. This would have absolved too many former directors of the collapsed SVB from future legal responsibility in case of potential lawsuits related to bankruptcy.

However, company representatives added certain restrictions to the application, positively influencing the court's decision. Leerink is to take over the investment banking operations in exchange for cash, a 5% equity instrument, and the repayment of an intercompany note.

"The purchase price consists primarily of (1) $55mm in cash paid to Seller at closing, and (2) a synthetic equity instrument pursuant to which SVBFG will share 5% of any profits distributed to investors going forward. It is not possible to put a number on the value of the synthetic equity instrument because our future profits cannot be known at this time," the Leerink Partners spokesperson commented.

Shortly

after regulators took over Silicon Valley Bank, its investment banking division

declared bankruptcy. However, it presented plans to sell its non-banking assets

to repay bondholders.

SVB is Back in Germany and the UK

SVB Securities is another 'piece' of the collapsed Silicon Valley Bank that has found a new owner. Finance Magnates reported in March that HSBC bought the British branch for just one pound. Subsequently, the lending giant transformed the unit into HSBC Innovation Banking. The new division focuses on the technology sector and innovations in the economy.

The German SVB also survived, forming a new local branch. SVB Germany has assumed the entirety of Silicon Valley Bank Germany's business operations. Although its American counterpart declared bankruptcy, the European subsidiary continues to operate.

However, SVB's problems are not over, as evidenced by an investigation initiated by the G20. Klaas Knot, the Chairman of the Financial Stability Board of the G20, has announced that the reasons for the bankruptcy of the bank and its impact on the banking sector's stability will be thoroughly examined.