After 3 years, Fund IV hits 80% committed / drawn mark

You’d think that the window between Canada Day and July 4th would count as a “quiet period” for folks in the growth capital business. In fact, I can’t help but notice that we have people headed off in various directions over the next two weeks for due diligence sessions on our next round of financings.

As loose as U.S. commercial banks are being right now (see prior post “Bloomberg: Regulators stand by while U.S. bank lenders get footloose” May 14-14), there’s still plenty of good opportunities for established firms such as ours to help entrepreneurs in the innovation economy access the growth capital they need in a non-dilutive form.

With these new financings, our $200 million fund (all equity btw) will have more than 80% of its capital either committed or drawn. Now, don’t be alarmed. Our fund structure allows us to recirculate 100% of our capital an unlimited number of times during the life of the limited partnership. When a portfolio company gets sold, IPOs or re-fi’s us, we get that capital back and redeploy it in another financing. Which is why we are able to squeeze perhaps $600 million of investment power out of $200 million of institutional capital.

That said, it has only been three years since the July 1, 2012 first close of Wellington Financial Fund IV. We hit the 80% committed/drawn mark in Fund IV once before, in March 2014 in fact. With 11 different exits last year, we had plenty of recycled firepower for more financings in 2015. But that was last year, and our sectors of focus remain ripe with opportunity. Our investors care more about maintaining our 14 year track record of profitability than a raft of new deals, but high utilization certainly enhances their net returns — while demonstrating that we are providing highly competitive funding on terms that make sense for CFOs across North America.

What will the next 12 months bring?

MRM
(Happy Canada and Independence Days!)