Hedge funds offering to buy startup deposits stuck at Silicon Valley Bank -Semafor
(Reuters) -Hedge funds are offering to buy startup deposits stranded at Silicon Valley Bank (SVB) for as little as 60 cents on the dollar, Semafor reported on Saturday, citing people familiar with the matter.
Bids range from 60 to 80 cents on the dollar, the report said adding that the range reflects expectations for how much of the uninsured deposits will be eventually recovered once the bank’s assets are sold or wound down.
Firms like Oaktree which are known for investing in distressed debt are reaching out to startups after SVB’s seizure by the Federal Deposit Insurance Corp (FDIC), the report said.
Traders from investment firm Jefferies are also contacting startup founders with money stuck at the bank, offering to buy their deposit claims at a discount, The Information reported separately.
Jefferies is offering at least 70 cents on the dollar for deposit claims, the report said, citing several people with direct knowledge of the matter.
Oaktree declined to comment on the reports. Jefferies could not be immediately reached for comment.
Silicon Valley Bank imploded after depositors, concerned about the lender’s financial health, rushed to withdraw their deposits. The frenetic two-day run on the bank blindsided observers and stunned markets, wiping out more than $100 billion in market value for U.S. banks.
(Reporting by Kanjyik Ghosh in Bengaluru; Additional reporting by Akanksha Khushi; editing by Grant McCool)