March 9 (Reuters) - Startup-focused lender SVB Financial Group (SIVB.O) is selling assets and has embarked on a $1.75 billion share sale to shore up its balance sheet after cutting the 2023 forecast as rising interest rates weighed on the company and its customers.
SVB's troubles are the latest example of strain in rates-sensitive parts of the U.S. economy - coming just hours after crypto-lender Silvergate said it was winding down operations late on Wednesday.
Shares in the California-based parent of Silicon Valley Bank dropped nearly 30% in premarket trading on Thursday.
SVB loans money to early-stage businesses and says it banked nearly half of U.S. venture-backed technology and life-sciences companies with stock market listings in 2022.
Its customers' "cash burn" rose in February and is driving deposits lower than forecast, CEO Greg Becker said in a letter to investors. Combined with higher costs of capital, that is pressuring margins and income, he said.
In response, SVB said it is seeking to raise more than $2 billion, made up of $500 million from private equity firm General Atlantic and $1.75 billion via a public equity offering.
General Atlantic was not immediately available for comment outside normal business hours.
The company also liquidated most of its securities portfolio, raising $21 billion, which it plans to re-invest in shorter-term debt while doubling its term borrowing to $30 billion.
"We are taking these actions because we expect continued higher interest rates, pressured public and private markets, and elevated cash burn levels from our clients," Becker said.
"When we see a return to balance between venture investment and cash burn – we will be well positioned to accelerate growth and profitability," he added, noting SVB is "well capitalised".
SVB also published updated outlook estimates, and forecasts a "mid thirties" percentage drop in net interest income this year - larger than the "high teens" drop it forecast seven weeks earlier.
It now projects the fall in net interest margins this year to ease to 1.45-1.55% from its January forecast for 1.75-1.85%.
