Winnipeg Free Press - PRINT EDITION

ENSIS unitholders will have to wait for redemptions

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UNITHOLDERS in the old ENSIS Growth Fund, who hoped to find out this week when they could cash out, will have to wait. Again.

GrowthWorks Canadian Fund, which bought ENSIS in late 2007, has received regulatory approval to continue the freeze on its assets until July 31. It initially suspended redemptions back in November when it faced a cash crunch brought on by failing markets for mergers and acquisitions and initial public offerings.

Tim Lee, Toronto-based chief investment officer for venture capital at GrowthWorks, said he had hoped regulators would have approved its redemption-management plan by now, but he doesn't see the extension as a negative development.

"The regulators feel like they need to be diligent and make sure they're looking out for our shareholders' best interests," he said.

"There is a lot of encouragement we can take from this. If they thought we were working contrary to our shareholders' interests, we would have heard from them quite quickly that we should cease and desist."

GrowthWorks has proposed allowing unitholders to redeem their funds either semi-annually or annually up to some capped amount. The root of the fund's problems is if it tried to meet all of the redemptions that would likely come due, most if not all of its cash and cash equivalents would be depleted and it would likely have to sell off many of its holdings in private companies at fire-sale prices.

Regulators simply need more time to examine GrowthWorks' proposal, said Bob Bouchard, director of corporate finance at the Manitoba Securities Commission.

"We want to do it once and have that be it. We don't want to have to come back and issue other orders," he said.

"I don't think there's any major concern that we won't come up with some sort of solution," he said.

Lee is quick to point out the challenge facing GrowthWorks bears little resemblance to the Crocus Investment Fund debacle that started in 2004. The now-defunct fund, once the darling of Manitoba's venture-capital scene, halted sales and redemptions amid serious concerns about what turned out to be overly inflated values of the holdings in its portfolio. It was subsequently wound down, faced a scathing report from the auditor general and was the subject of a class-action lawsuit.

geoff.kirbyson@freepress.mb.ca

Republished from the Winnipeg Free Press print edition April 18, 2012 B7

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