Last week, U.S. banking regulators closed Silicon Valley Bank, a bank that specialized in commercial banking for the technology sector. Over the weekend, federal entities took measures to ensure that the depositors of Silicon Valley Bank would be held harmless. At this point, a handful of additional banks are experiencing substantial distress or have also been closed by banking regulators. These banks include Silvergate, Signature Bank, and First Republic.
The Alaska Permanent Fund Corporation has exposure to these banks in the form of passive investments in index funds. As of December 31, 2022, the market value of these investments totaled $7.6 million. The total market value of APFC investments on December 31 was $74.4 billion.
The APFC understands that many of the portfolio companies in its private equity portfolio used Silicon Valley Bank for operating purposes. As of today, APFC understands that those companies’ deposits have been guaranteed by the federal government.
“The APFC is a fully diversified global investor,” stated Executive Director Deven Mitchell. “At any point in time, some sector of the economy can experience distress.”
Chair Ethan Schutt stated, “The Board of Trustees is committed to maintaining prudent diversification of its investments. While the U.S. and global economies continue to make progress toward emerging from the global pandemic, we should not be surprised by periodic reversals in various sectors.”
The APFC will continue to closely monitor this situation.