GrowthWorks Canadian Fund has entered into a participation agreement with Roseway Capital, whereby Roseway completed a $20m investment in GrowthWorks Canadian Fund. Roseway is a venture capital investor funded by entities advised by UK-based Headway Capital Partners.
Under the participation agreement, Roseway agreed to invest $20m in exchange for a participating interest in Canadian Fund’s holdings in 15 portfolio companies, with a total current carrying value of approximately $100m.
The participating interest entitles Roseway to receive 20% of the proceeds (cash or shares) earned on or generated from the sale or divestment (participation payments) of the participation holdings.
GrowthWorks Canadian Fund will repay the investment made by Roseway in full on the third anniversary of closing. Most of the Participation Holdings are expected to be divested over the three-year term of the investment. The agreement provides for minimum participation payments of $5.7m per year during the three-year term.
In addition, under the agreement, Roseway may provide up to $3m in additional follow-on funding for the companies in the participation holdings.
David Levi, president and CEO of Canadian Fund, said: “This transaction provides Canadian Fund with additional capital to make follow-on investments in its portfolio companies at a time when there is a shortage of venture capital, particularly in Ontario. In a venture portfolio, it is important to continue to back those companies making exceptional progress.”
Christiaan de Lint, partner at Headway Capital Partners, said: “The Canadian Fund has a number of exciting portfolio companies and we believe the availability of additional follow-on capital for portfolio company growth will enhance the fund’s ability to drive significant investment returns for all stakeholders in the medium term.
“Also, the Roseway and GrowthWorks teams are very complimentary, and we believe will help support portfolio companies to achieve their business milestones and deliver positive returns to investors.”