Bain Capital's Connaughton says SVB fallout will weigh on banks

Bain Capital's co-managing Partner John Connaughton told Reuters in an interview on Wednesday that the fallout from SVB Financial Group's collapse will weigh on banks that have already retrenched from lending. Connaughton said that private equity firms like Bain have been turning to peers with direct lending arms to secure debt for deals because traditional bank financing has become scarcer as banks adjust to the quick rise in interest rates.

Bain Capital's co-managing Partner John Connaughton told Reuters in an interview on Wednesday that the fallout from SVB Financial Group's collapse will weigh on banks that have already retrenched from lending.

Connaughton said that private equity firms like Bain have been turning to peers with direct lending arms to secure debt for deals because traditional bank financing has become scarcer as banks adjust to the quick rise in interest rates. This is despite debt from direct lenders being significantly more expensive than bank financing. While the banking sector is strong enough to withstand SVB's failure, the lender's collapse will add to the caution that banks have been showing, Connaughton said in a Reuters Newsmaker interview.

"The questions that are getting raised about Silicon Valley Bank are where is the liability and asset matching... where does that all sit and what liquidity concerns are out there?," Connaughton said. Founded in 1984, Boston-based Bain Capital has grown into one of the world's largest investment firms with more than $160 billion in assets under management spread across private equity, credit, real estate, venture capital, life sciences and cryptocurrency and blockchain investments.