“Not all labour-sponsored venture capital funds – with their high management fees and generous tax credits – end up as investment disasters.
But to become investor favourites, the VC funds – which are in the process of being wound down in most of the country – are required to transform themselves, and in one case take a path that has not been trodden before.
Consider the path taken by the Business, Engineering Science & Engineering Discoveries (BEST) Fund, which started life in the late 1990s. It is now a publicly listed limited partnership, that pays its owners $0.50 per share per year. Shareholders of the company with $38.6 million in assets received one quarter of that payment last week,” writes Barry Critchley for the Financial Post May 5, 2015.
Critchley continued, “The transformation for the BEST fund started about eight years back when the manager, who also manages other investment funds, decided that fixed-income investments made better sense than equity investments.
The solution: re-organize the BEST fund into a publicly listed LP that was similar to the private debt LPs it was already providing to friends and family and accredited investors. Those private active LPs were attractive because they generated active business income, were Canadian controlled, were tax efficient – and suited investor needs.”
Read the full article here.
Raymond Matt, CFP, CLU, TEP, CHS
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