Hedge funds offering to buy startup deposits stuck at Silicon Valley Bank -Semafor

(Reuters) -Hedge funds offer to buy startup deposits stranded in Silicon Valley Bank (SVB), for as low as 60 cents per dollar, Semafor reported Saturday, citing people who are familiar with the matter.

According to the report, bids range from 60-80 cents per dollar. This is because the range represents the expectations of how much of the uninsured depositors will eventually be recovered once the bank’s assets and liabilities are sold or wound up.

Oaktree, a firm known for investing in distressed loans, is reaching out to start-ups following the seizure of SVB by the Federal Deposit Insurance Corp. (FDIC), according to the report.

Jefferies has also been reported by The Information that traders from the investment firm are contacting startup founders to offer to buy their deposits claims at a discounted rate.

According to the report, Jefferies offers deposit claims at least 70 cents per dollar, according to several people who have direct knowledge of the matter.

Oaktree didn’t immediately respond to Reuters’ request for comment. Jefferies was not available immediately.

Silicon Valley Bank collapsed after depositors were concerned about the bank’s financial health and ran to withdraw their money. The panicked run on Silicon Valley Bank over the next two days stunned markets and blindsided observers.

(Reporting from Bengaluru by Kanjyik, Ghosh; Additional reporting by Akanksha Chushi; editing and transcription by Grant McCool).