Wellington Financial Celebrates 15 Years
That seems like a long time when you actually write it down.
August 2015 represents the 15th anniversary of our first growth financing transaction in Fund I. It was a $500k loan to a Vancouver-based company, and despite the small ticket it taught us a lot; today, our average deal size is closer to $8 million. Still small compared to the high yield market, but big enough for most firms in the SME world.
Wellington Financial Fund IV, which announced its $200 million final close in 2013, is a successor fund to three previous entities. Fund III, which was capitalized with $150 million in re-circulating equity funding commitments, led $315 million of financings via 50 loans over a 6-year period. Fund II, with $83 million in re-circulating capital, led $105 million of financings via 18 loans over a 2-year period. Fund I, with just $7 million in re-circulating capital, led $19.5 million of financings.
2015 has been a highly successful year for Wellington’s institutional limited partners, with $43 million of new corporate loan commitments – on the heels of $95 million of commitments in 2014. Wellington’s Fund III and Fund IV portfolio companies have attracted global attention this year, with disclosed acquisitions (pending and/or closed) of BlueStreak Technology (Montreal), InterAct 911 (Chicago), Maxymiser (New York), Softgate Systems (New Jersey), as well as the successful NYSE initial public offering of Xactly Corp. (San Jose). One other Fund III portfolio co was acquired in a strategic acquisition last month, and details will be available in early September.
We should earn our LPs a 10% net return this year, which is always an excellent number for a debt fund; but it looks even better when you consider the TSX is already off 11.5% YTD, and there’s no end in sight to the current rout.
With the recent acquisition of Maxymiser by Oracle, and the IPO of Xactly (XTLY:NYSE) on the New York Stock Exchange, the innovation ecosystem has a good sense of the high quality nature of our portfolio. To quote one U.S.-based VC: “Wellington wants to back my good companies.”
The fact that these great VC-backed companies were able to deftly use our non-dilutive, non-amortizing True Growth Capital to achieve their business objectives is the perfect proof-point for every CFO trying to weigh their financing choices. Our structure is the right choice within the venture debt sector, particularly for mid-stage companies with good growth prospects. And these two representative management teams will attest to our experience, trustworthiness and partnership approach.
As equity markets have yet again produced negative results for investors so far this year, we are reminded about the excellent risk-adjusted returns that can be earned in the private debt market. Although 80% of our capital is currently committed to 23 growth companies across North America, our recirculating capital base positions our firm well for the next few years (see prior post “After 3 years, Fund IV hits 80% committed / drawn mark” July 3-15); if you are looking for anywhere from $2 million to even $60 million, have no fear. There’s plenty of capital available within our group for good companies.
With today’s 15th anniversary announcement, we also shared the news of the recent promotion of Paul McKinlay to Vice-President. He’s soon to start working from our San Francisco office after a couple of successful years at the Toronto HQ. Congrats Paul.
To all of our limited partners, portfolio companies, ecosystem partners, professional advisors and referral sources, thank you for making it all possible. And so much fun, too. Our entire team is deeply grateful for the opportunity to help build great businesses. And see our capital help create/preserve more than 11,500 jobs along the way.
To Ken Rotman, Jeff Parr, and the Board of Directors of Clairvest Group Inc. (CVG:TSX), which was our lead investor back in 2000 and has been our partner in the business ever since, thank you for giving us the tools, support and unfailing guidance that has allowed us to get this far.
Time for a new goal: celebrating our 30th anniversary. Until then.
Congrats Mark – and all the Wellington team!