Investment Strategy
The Investment Manager, SVGIM, employs a strategy to invest in publicly quoted companies which will create value through strategic, operational and management changes. SVGIM follows a practise of constructive corporate engagement and aims to work with management teams in order to enhance shareholder value.
We aim to build a consensus with other stakeholders, and prefer to work alongside like-minded co-investors as leaders, followers or supporters. We try to avoid confrontation with investee companies as we believe that there is strong evidence that overtly hostile activism generally generates poor returns for investors.
We are long-term investors; we typically aim to hold companies for the duration of three-year investment plans that include an entry and exit strategy and a clearly identified route to value creation. The duration of these plans can be shortened by transactional activity or lengthened by adverse economic conditions. Before investing we undertake an extensive due diligence process, assessing market conditions, management and stakeholders. Our investments are underpinned by valuations, which we derive using private equity-based techniques. These include a focus on cash flows, the potential value of the company to trade or financial buyers and the capital structure.
Our typical investee company has a market capitalisation of under £150 million at the time of initial investment. We believe that smaller companies provide the greatest opportunity for our investment style as they are relatively under-researched, often have more limited resources, and frequently can be more attractively valued.
We believe that this approach, if properly executed, will generate favourable risk-adjusted returns for shareholders over the long term.