TORONTO – New Millennium Venture Partners Inc., a Canadian venture firm, in November was awaiting approval from the Ontario Securities Commission to raise the first Canadian vehicle to back early-stage e-commerce and Internet companies in the country. The venture firm expected the Commission’s approval on the labor-sponsored fund in December.
New Millennium Internet Ventures Fund, which targets C$100 million ($68.4 million) to C$150 million ($102.6 million), also will be the first Canadian fund to offer investors complete capital protection in exchange for reduced upside.
New Millennium will offer two kinds of shares – protected and all venture – and investors may purchase one or both. The fund managers will invest a portion of the protected shareholders’ capital in debt securities with a maturity amount equal to the subscription price, thereby ensuring the return of the principal within 10 years but potentially lowering the return. Shareholders who choose the all-venture option will not have principal protection but could benefit from higher venture returns.
The move takes into account the conservative investment strategies characteristic of Canadian retail investors, said Tim Diamond, executive vice-president at Triax Capital Holdings Inc., the administrator of the fund.
Fund raising began in mid-November and will end February 29, because the vehicle will purchase 10-year securities that come due in February 2010. Venture shares will be offered throughout the life of the fund. Individual investors are permitted to invest between C$500 ($341) and C$5,000 ($3,407).
On top of the returns from the fund, individual investors in New Millennium will benefit from a 30% tax credit on investments of up to C$5,000 ($3,421), which covers investors in the some 18 labor funds throughout Canada.
Retail brokers and financial planners will limit the investment opportunity to Ontario residents because they are the only Canadians eligible for the tax break on the labor-sponsored fund.
Fund managers expect to completely invest or commit the vehicle to about 30 or 40 companies within two years. Initial investments will range from C$250,000 ($171,057) to C$2 million ($1.4 million), Diamond said.
The principals at Triax came up with the idea for the New Millennium fund, partly because they had to pass up a number of deals, including bamboo.com Inc., an online provider of virtual tours that went public in August because Triax had no investment vehicle in place, Diamond said.
Triax has about C$700 million ($477 million) under management in six other funds, the most recent of which, the C$28 million ($19.1 million) New Millennium Technology Trust, is completely invested or committed.
New Millennium will act as the fund’s manager, responsible for making investments, and will be assisted by Elijah Asset Management, a San Francisco investment-consulting firm, and William Easterbrook, a portfolio manager at investment bank Hambrecht & Quist, also in San Francisco. Triax will be responsible for shareholder reporting, client services and broker-dealer relations.