Golden opportunity for brewer

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This article was published 18/11/2016 (3353 days ago), so information in it may no longer be current.

Saskatchewan’s Golden Opportunities Fund Inc. is the buyer of Fort Garry Brewing Company Ltd., the oldest local brewery in the province.

The sale of Fort Garry by current owners Russell Breweries Inc. was announced a month ago, but the buyer’s identity had been kept under wraps.

The Saskatoon-based labour-sponsored venture capital fund is paying $7.7 million for the brewer of such local beers as Fort Garry Pale Ale and Frontier Pilsner.

It’s teamed up with local Winnipeg investors, including Winnipeg lawyer David Filmon and Charlie Spiring, founder and former CEO of Wellington West Capital.

Wanda Hunchak, vice-president of Westcap Mgt. Ltd., the entity that manages Golden Opportunities, said, “We’re very excited to bring Fort Garry back to 100 per cent Manitoba ownership.”

Although the fund is based in Saskatchewan, Golden Opportunities raises about $1 million per year from Manitoba investors and has a mandate to invest in Manitoba companies.

“We know Golden Opportunities well, and they are great partners,” said Filmon, who is a member of the investment advisory committee of another fund Westcap manages. “They are patient capital and very supportive of investee companies.”

It will be the largest investment by far the fund has made in Manitoba. Golden Opportunities was launched in Saskatchewan in 1999, where it raises about $40 million per year, and it began raising money in Manitoba in 2008.

To date, the only other investment it has made in Manitoba was $500,000 in Librestream as well as a few small oil and gas companies that have operations in this province.

Golden Opportunities is structured similarly to the defunct Crocus and Ensis funds in Manitoba. It has invested almost $341 million in 127 companies since its inception 18 years ago and has more than 28,000 shareholders across the two provinces.

The 2016 federal budget restored the 15 per cent federal tax credit the former Conservative government had gradually cut back. Investments in the fund also include a 20 per cent provincial tax credit.

Fort Garry was originally founded in 1930, acquired by Molson in 1960 and closed in 1990 after the merger of Molson and Carling O’Keefe.

The brand was revived in the mid-’90s by the late Richard Hoeschen, great-grandson of the founder, and then acquired by Russell in 2007.

The deal to acquire Fort Garry is being done simultaneously with another transaction that will see the rest of Russell’s B.C. brewing operations acquired by another company owned by Yong Lin and Xiaomin Wang for $1.8 million. The two deals will effectively wind down Russell.

The craft brewery industry in Canada is in a growth mode that has impacted Manitoba breweries well with the industry seeing 12 per cent growth in the past year.

Fort Garry may be the largest and oldest microbrewer in the province, but it will soon face competition from a host of startups such as Torque, Peg Beer, Barn Hammer and soon-to-open Brazen Hall Kitchen & Brewery and One Great City Brewing Co., along with Half Pints, which already has a solid niche.

But Filmon said he believes there is plenty of room in the market.

“Sure, the local craft beer market is growing, but it’s nowhere near where it is in the rest of the country.” he said. “I think it’s a good thing there is other competition. I believe the pie is going to grow, and we’re extremely well-positioned.”

The deal still requires approval from a two-thirds majority of Russell shareholders who will vote at shareholder meeting in Vancouver Nov. 28.  A company management information circular issued Oct. 31 said directors and other shareholders who collectively own 40 per cent of Russell’s shares are in support of the sale to Golden Opportunities.

martin.cash@freepress.mb.ca