TORONTO, October 20, 2004 - VenGrowth Capital Partners Inc. ("VenGrowth"), a leading private equity firm with over $1 billion in assets under management, today announced a $5 million investment in established insurance firm Focus Group Inc. ("Focus Group").
The VenGrowth Traditional Industries Fund Inc. and The VenGrowth II Investment Fund Inc. provided a subordinated loan that was used by Focus Group to establish an insurance company - Omega General Insurance Company ("Omega") - to facilitate the repatriation of surplus assets by foreign insurance companies. Omega will provide foreign insurance companies, with branches in Canada, the ability to exit the Canadian market with surplus capital in hand, on a timelier basis. The deal represents the third investment completed by the Traditional Industries Fund -VenGrowth's most conservative labour sponsored investment fund ("LSIF").
Focus Group, led by an executive group with extensive insurance experience, has serviced the North American insurance industry since 1986. The company provides critical services - such as financial and risk management, compliance, claims handling and administrative support - for international and North American insurance and re-insurance companies.
An increasingly important aspect of Focus Group's business is its "run-off" service for companies that have ceased writing business in Canada and want to repatriate capital. Omega, established as a property and casualty insurance company with a significant capital base, will have the ability to take on existing books of business and speed up the repatriation process for departing insurers.
"Focus Group is an established company with the qualities that we target on behalf of shareholders - an experienced management team, proven track record, cash flows and a unique value proposition," said Graham McBride, Managing General Partner, VenGrowth Capital Partners. "With the proceeds of this financing, Omega is well positioned to take advantage of a significant opportunity in the Canadian insurance industry."
A growing level of insurance claims, declining revenues from investment portfolios and industry consolidation are among the factors that have accelerated foreign insurers' strategic withdrawal from Canada in recent years. A total of 26 foreign insurance companies are currently in run-off, with a further 20-25 expected to withdraw from the Canadian market. The total assets represented by this target group are approximately $2 billion.
"We are delighted to secure VenGrowth's support to help us further enhance our service to an important segment of the Canadian insurance industry," said Philip Cook, Chairman and Chief Executive Officer, Focus Group Inc. "VenGrowth is a leader in the private equity market with a strong track record of partnering with traditional service businesses."
About VenGrowth Traditional Industries Fund
The VenGrowth Traditional Industries Fund Inc. is VenGrowth's most conservative labour sponsored investment fund ("LSIF"). Launched in November 2003, the Fund focuses on predominantly small and medium sized Canadian companies in traditional manufacturing and services industries that are expected to generate sustainable cash flows. The Fund invests primarily using debt instruments with the objective of generating interest and dividend income to the Fund. In addition, the Fund will typically hold equity interests alongside the loans with the intention of generating long-term capital appreciation. The Fund is managed by a team of specialized VenGrowth professionals led by Graham McBride, a highly regarded mezzanine financing expert with over 19 years of experience. In addition to expert management, the Fund offers investors long-term performance potential, 100% RRSP-eligibility and, through its LSIF structure, eligibility for substantial tax credits. The Fund had net assets of over $24.5 million as of September 30, 2004.
About VenGrowth
With over $1 billion in assets under management, VenGrowth is Canada's largest private equity and venture capital firm managing both retail and institutional assets. Since 1982, VenGrowth's accomplished team of seasoned private equity managers has invested over $1 billion in 171 companies, building a strong track record of successful portfolio transactions. These investments have been made on behalf of over 160,000 individual investors as well as leading pension funds, insurance companies and family foundations. VenGrowth's offices are located in Toronto (Corporate Headquarters) and Ottawa. For more information, please visit: www.vengrowth.com
About Focus Group
Focus Group Inc was established in 1986 to provide a modern alternative for Companies and Organizations operating within the North American Insurance Industry. The group is comprised of senior personnel and executives from the Insurance Industry with many years of practical experience in the areas of company management, operations, finance, and claims management. In addition to permanent professional staff, the company has a full range of back-up and support personnel.
For further information:
Angus Fisher
VenGrowth Capital Partners
(416) 967 2271
afisher@vengrowth.com
