Laurie Goldberg, the former chief operating officer of Assante Corp., has been appointed to the same position with the Crocus Investment Fund.

Goldberg's arrival at Crocus will set the stage for the 10-year-old labour-sponsored venture capital fund to start managing third-party funds in addition to the money it raises through its retail distribution network.

"It is my expectation that within the next 12 months we will be managing about $100 million in third-party institutional money. About one-third of that should be finalized within a relatively short period of time," Crocus CEO Sherman Kreiner said in an interview.

Kreiner said Goldberg's experience in leading the integration of 17 different investment distribution companies during the course of his five years at Assante will be an important asset for Crocus.

Growth

Prior his appointment at Assante, Goldberg spent 15 year at the Arthur Andersen office in Winnipeg, the last few as its managing partner. He said, in part, his decision to accept the position at Crocus was because it would involve him once again in a growth play.

"As I got to know the operations at Crocus, I was attracted, among other things, by this strategy for growth," Goldberg said.

Crocus officials have been planning for some time to gain access to third-party funds -- most likely with a healthy portion of Manitoba pension fund capital -- that would allow it to leverage the organization's private equity investment experience and administrative infrastructure.

"The greater the assets under management, the better the economies of scale," Goldberg said, adding it is true for both investment analysis as well as administrative back office systems.

Goldberg left Assante in the spring, prior to the sale of the company's Canadian operations to CI Fund Management for $846 million in August. He said his departure was timed around the completion of the Canadian integration and his own desire to stay in Winnipeg and be able to spend more time with wife and three young children.

"I spent a lot of the last 20 years on airplanes, doing work outside of the province." he said. "I wanted to get more balance in my life and focus more on Manitoba in my career."

Crocus needed to add to its senior management after the untimely death last May of Mike Bessey, who worked at Crocus for about a year before succumbing to cancer.

As of last March, Crocus' portfolio was valued at about $177 million. Last year fund sales totalled $27.8 million, but there were redemptions totalling $18.5 million.

Fund management

Retail investment in Crocus and the ENSIS Growth Fund, the other labour-sponsored venture capital fund in Manitoba, enjoy a 15-per-cent federal tax credit and a 15-per-cent provincial tax credit as well as being RRSP-eligible. Investors must hold the investment for eight years.

Kirk Falconer, an official with Macdonald and Associates, Canadian venture capital consultants, said it is not uncommon now for labour-sponsored funds to get into the third-party fund management.

"Among other things these funds already have the private equity investment experts on staff," Falconer said in a telephone interview from his office in Ottawa.

The management company that operates the ENSIS Growth Fund also manages an $8-million limited partnership fund. In the ENSIS case, according to ENSIS vice-president Ken Bicknell, the third-party fund has an identical mandate to the main labour-sponsored fund and has the option to invest in each ENSIS deal. He said the limited partnership, which raised funds in 1999, is almost fully invested now.

Kreiner said the new third-party funds that Crocus intends to launch will probably be sectoral in scope and have a different mandate than the parent fund. Unlike ENSIS, he said investment managers at Crocus are employees of the fund and management fees for third-party funds would go to Crocus Investment Fund corporation, which would be "directly beneficial to Crocus shareholders."

martin.cash@freepress.mb.ca