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Desmarais-backed funding car targets to lift billion
Natividad Moen
September 24, 2022
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Desmarais-backed funding car targets to lift $1 billion

First $200 million raised by way of Portage Capital Answers Fund is coming from Energy Corp.

Adam Felesky, co-founder and chief executive of Portage Capital Solutions Fund.
Adam Felesky, co-founder and leader government of Portage Capital Answers Fund. Photograph by way of Christinne Muschi/Bloomberg information

An funding car sponsored by way of Quebec’s Desmarais circle of relatives is getting down to lift $1 billion to fund investments in late-stage monetary era startups in North The us and Europe amid a path in tech valuations.

The primary $200 million raised by way of Portage Capital Answers Fund is coming from Energy Corp., the Desmarais-controlled monetary conglomerate that counts Nice-West Lifeco and Mackenzie Investments amongst its holdings.

However Adam Felesky, co-founder and leader government of Portage, stated the remainder of the cash and the point of interest on investments will likely be outdoor the Energy universe.

The fund will invest of round $100 million, on reasonable, in fintech firms around the wealth control, banking and insurance coverage sectors. The volume invested would possibly build up if there may be curiosity in co-investments by way of restricted companions who dedicate capital to the Portage fund, Felesky stated.

The primary fundraising spherical is predicted shut within the fourth quarter, with a couple of anchor investments conceivable by way of then.

Felesky stated goal firms for the Portage Capital Answers Fund will occupy the “wedge” between early-stage and expansion firms and corporations which are able to move public, with annual expansion of 25 to 60 in step with cent, a slower tempo than a normal “expansion” corporate.

“In occasions of marketplace pressure, that wedge widens so much, Felesky stated. “So … we predict it’s in particular related for as of late’s marketplace.”

Even though Portage is possibly maximum identified for its undertaking and expansion degree financing, the release of Portage Capital Answers Fund comes a couple of yr after Portage Ventures backed a US Particular Goal Acquisition Corporate (SPAC), or “clean take a look at” corporate, to push its fintech technique well past early-stage companies. Portage Fintech Acquisition Company raised US$240 million and won an inventory on Nasdaq.

The SPAC has but to make an acquisition.

“That is in point of fact simply some other extension of that technique in that what we are seeing out there is there may be a large number of nice late-stage firms that in point of fact do not have compatibility within the bucket of expansion,” Felesky stated.

He stated the brand new Portage fund will search out control groups and shareholder teams that want to stay in regulate and aren’t ready to promote to personal fairness buyout companies making the rounds.

“Personal fairness may be very energetic and they have got raised a large number of capital, and I feel they’re going to stay energetic,” he stated, including that he thinks there may be room for each methods.

Goal companies would preferably be round or at break-even, and “with our capital, have the trail to profitability,” he stated, including that they’d generally want 24 to 36 months to mature sooner than taking a look at a “liquidity window” equivalent to an preliminary public providing.

Given the present marketplace prerequisites together with emerging rates of interest, inflation, and supply-chain bottlenecks which are crimping industry plans, hammering valuations, and making it much less interesting to faucet public fairness markets, Felesky stated fintech firms with sturdy marketplace positions may use the proceeds of a Portage funding to consolidate.

The brand new Portage fund may additionally spend money on convertible securities via non-public placements presented by way of public firms, he stated. This would offer attainable upside for the fund and be extra palatable to the general public corporate’s current shareholders as a result of it might no longer instantly dilute them at a time when valuations have taken successful.

Portage made two key hires to steer the newest fintech platform. Devon Kirk was once plucked from CPP Investments, the Canadian pension massive the place she spent 10 years in non-public fairness taken with financials and, maximum not too long ago, within the position of managing director and head of capital answers.

Her co-head, Daniel Ballen, has spent just about 20 years making an investment in non-public fairness, structured fairness and particular eventualities taken with monetary services and products, fintech and actual property era.

Previous to becoming a member of Portage, he was once a portfolio supervisor at PIMCO, primarily based in New York, the place he led a group taken with structured fairness and personal fairness investments in North The us and Europe for the company’s choices franchise. He additionally honed his fintech credentials at the funding groups of Bain Capital and Pine Brook Companions.

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