Charging into 2016 with vim and vigour

I’m not sure exactly when the blogging started to tail off….

The peak for posting was 2007, when our team hit an average of almost two posts a day; that was a particularly “exciting” year on the macro front, and since my TPA role began in 2008, it should come as no surprise that it has been downhill ever since on the blogging front. When asked, I always tell people that blogging takes “about 20 minutes a day.” The truth is that one’s blogging prose doesn’t become “widely followed in Canada’s financial community” (according to The New York Times anyway) if you give it half an effort. If you don’t do proprietary research. If you don’t pull punches when warranted. And that takes time.

With the delights of my two public service roles now behind me (see prior posts “On the launch pad: The Gordie Howe International Bridge” Dec. 16-15 and “Public Service can be truly rewarding” Aug. 23-15), there is suddenly more time for almost everything! Including keeping you abreast of the successes, trials and tribulations of all of your favourite topics, including AV, Bay Street, BBRY, CPPIB, the DTM, KO, MARS, the North American tech ecosystem, to name a few.

Let’s start the new year off in our own backyard.

Our team ended 2015 on a great note. After a busy third quarter with $28 million of new investments via Wellington Financial Fund IV, we entered the holiday period with four new transactions in due diligence for our new $300 million Fund V (one of which closed prior to year end). Two were in Canada while the other pair are for U.S.-based, VC-backed tech firms.

In terms of overall profit distributions to our LPs, I think 2015 will have been the best yet. We’ll never match the 42.8% Internal Rate of Return of Fund I (according to Preqin data), but as the fund has grown in size and the length of the deals have become much longer, we really aren’t as focused on IRR as we are on generating low volatile distributions for our LPs.

A deal with a two year term will invariably generate a higher IRR than a five year one, but not as much revenue.

Despite Fund V’s broader mandate, the focus remains on high quality innovation companies. I expect the portfolio will continue to be dominated by U.S.-based, VC-backed companies, but that’s merely a function of the larger target market south of the border. Although we’ve had a presence in California since 2009, our new Menlo Park office at 3000 Sand Hill Road reflects that reality. And don’t be surprised if we find our way into some PE-sponsored situations. A 5 year term loan fits the needs of a large pool of companies. Whether or not they are EBITDA-positive.

Wishing you all the best for 2016. Good health, first and foremost!

We’ll be “seeing” more of each other, I promise.

MRM