TORONTO, December 9, 2008 – The Board of Directors’ of The VenGrowth Investment Fund Inc. (“VenGrowth I”) and The VenGrowth II Investment Fund Inc. (“VenGrowth II”) (collectively “the Funds”) announce they have approved a change in how shareholders will receive a return of their investment. Investors will receive funds through an annual distribution of the proceeds from the disposition of portfolio companies, rather than through weekly redemptions.
In light of extended adverse market conditions, the Board of Directors of the Funds have determined it is in the best interest of shareholders to halt redemptions and adopt an annual distribution policy, effective immediately. The Boards and the Managers of each of the Funds believe this measure will prevent any mid-term liquidity challenges, help achieve optimal exit values for maturing portfolio companies once market conditions improve and ensure that proceeds generated from those exits are returned to all shareholders. The Independent Review Committee of each Fund has recommended the change to an annual distribution policy.
Although precipitated by current market conditions, the move is consistent with VenGrowth’s institutional-style approach to running venture capital funds. Institutional venture funds are run as finite pools, whereby investments are managed to maturity and then exit proceeds are distributed to investors as the fund is eventually wound down. Since 1982, VenGrowth has operated a series of venture funds in this manner.
Under the new distribution policy, the Board of each Fund will make a determination of the surplus cash available to be distributed to shareholders at the completion of each fiscal year, starting August 31, 2009.
“While not a decision we take lightly, we are convinced that the move to an annual distribution policy is the right decision for our shareholders,” said David Ferguson, VenGrowth Managing General Partner. “It will balance the desire to generate annual distributions to shareholders, while ensuring that a fair value for the excellent private portfolio companies can be obtained.”
In light of economic and stock market turmoil, the Funds find themselves with what they believe to be portfolios of high quality private companies, but without an environment conducive to exit events to generate cash to fund redemptions. The IPO market has essentially been shut down to private companies since the beginning of 2008. In recent months, advanced negotiations with prospective acquirers of a number of the Funds’ portfolio companies have been temporarily put on hold. Recognizing the cyclical nature of the exit market, it is typical for institutional venture funds to extend their life span to allow managers the opportunity to optimize exit values.
The Funds are invested in some of Canada's leading venture-backed companies. Wireless chip maker SiGe Semiconductor Inc. topped $69 million in revenues in 2007, with more than 300 million chips shipped worldwide. BelAir Networks Inc. was named by Dell’Oro Group as the number one wireless Internet infrastructure company, based on revenue for the last four quarters. Combined, the Funds had four companies on the 2008 Deloitte Technology Fast 50 list of Canada’s fastest-growing technology companies.
About VenGrowth
VenGrowth is a premier Canadian private equity firm. Since 1982, VenGrowth has invested over $1.3 billion in almost 200 North American companies, working alongside business owners to maximize potential. VenGrowth manages assets on behalf of over 150,000 individual investors as well as leading pension funds, banks, insurance companies and family foundations. VenGrowth's offices are located in Toronto (Corporate Headquarters) and Ottawa. For more information, please visit www.vengrowth.com.
Media Inquiries:
Angus Fisher
Director, Communications & Media
VenGrowth Asset Management Inc.
(416) 628 9255
afisher@vengrowth.com
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