Apollo Global Management Inc. and Carlyle Group Inc. are zeroing in on a book of loans up for grabs now that the former parent company of Silicon Valley Bank has filed for bankruptcy.
The loans are tied to SVB Financial Group’s investment arm, SVB Capital, and its investment banking arm, SVB Securities, according to people with knowledge of the matter.
Silicon Valley Bank crumbled earlier this month as a liquidity crunch fueled a bank run that left the once-storied tech darling with a negative cash balance of almost $1 billion.
The loans could be valued at as much as $10 billion, according to some of the people. Alternative asset managers will most likely be interested in a pool of loans worth $1 billion, another person said.
Apollo and Carlyle are weighing bids, and Blackstone Inc. has been preparing to take a look, the people said. The investment firms and SVB declined to comment.
Centerview Partners, an investment bank that’s advising SVB Financial, declined to comment.
SVB’s former parent is working with advisers to auction businesses and assets after filing for Chapter 11 protection. That bankruptcy auction is separate from a different attempt by the Federal Deposit Insurance Corp. to sell what remains of the bank.
Both the bankruptcy auction and the FDIC sale reflect the possibility for money managers to profit from the turmoil this month after three U.S. lenders collapsed within the span of a week.
Initially, the FDIC allowed only chartered banks to participate in its auction. By Monday, the agency had opened the door for private equity firms to bid on assets.
The potential for alternative-asset managers to profit from the upheaval reflects a shifting balance of power in finance. Firms such as Apollo, Blackstone and Carlyle wielded greater influence after the 2008 financial crisis, when new regulations curbed the ability of Wall Street banks to engage in risky lending and dealmaking.
In the following decade of low interest rates, the firms raised vast piles of money from yield-hungry pensions and endowments. Private equity and credit giants now have the dry powder to pick choice assets from failed banks and inject new equity into struggling lenders.