Apollo and Carlyle Search for Loan Deals at Bankrupt SVB Finance

Following the bankruptcy filing of Silicon Valley Bank's former parent firm, Apollo Global Management Inc. and Carlyle Group Inc. have focused their attention on a book of loans that are now up for grabs.

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According to those with knowledge of the situation, the loans are connected to SVB Financial Group's investment arm, SVB Capital, as well as its investment banking subsidiary, SVB Securities.

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The formerly tech darling Silicon Valley Bank collapsed earlier this month after a liquidity crisis fuelled a bank run, leaving it with a negative cash position of roughly $1 billion.

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Some of the persons claim that the loans might be worth up to $10 billion. A $1 billion loan pool will probably be of interest to alternative asset managers, according to another source.

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According to the people, Blackstone Corp. has been getting ready to look at offers while Apollo and Carlyle are assessing their options. Both SVB and the investing firms declined to comment.

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SVB Financial's investment bank, Centerview Partners, declined to comment.

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Bank Unrest

After requesting Chapter 11 protection on Friday, the erstwhile parent of SVB is working with advisors to auction off companies and assets. The Federal Deposit Insurance Corp.'s other attempt to sell the bank's remaining assets is separate from that bankruptcy auction.

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Both the insolvency auction as well as the FDIC sale show that money managers may be able to profit from the unrest this month as a result of three US lenders going down in the space of a single week.

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Only chartered banks were initially permitted to take part in the FDIC's auction. On Monday, the agency allowed private equity companies to submit bids for assets.

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The potential for alternate solution managers to make money off of the turmoil signals a change in the financial power structure. During the 2008 financial crisis, when new laws restricted the ability of Wall Street banks to conduct dangerous lending and dealmaking, companies like Apollo, Blackstone, and Carlyle exerted increasing power.

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The businesses raised enormous sums of cash from endowments and pension funds that were yield-hungry during the subsequent decade of low interest rates. Giants in leveraged buyouts and credit now have the capacity to seize desirable assets from failing banks and add fresh equity to struggling institutions.