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MM Venture Partners, which once invested out of a venture partnership with publicly traded GATX, has restructured itself into a specialized debt finance firm, still focusing on Canadian technology and life sciences sectors.

The Toronto-based firm begins its new life as MMV Financial Inc. with an all-new C$300 million investment program targeting Canada's emerging and mid-market sectors. The firm has received backing from U.S. and Canada-based private equity firms and financial institutions including Caisse de depot et placement du Quebec of Montreal, Conning Capital Partners of Hartford, Connecticut and Wells Fargo Foothill part of Wells Fargo & Company.

The firm will make debt investments of between C$3 million and C$5 million each, targeting early to mid-stage private venture-backed start-ups as well as public traded companies. "We'll invest anywhere from $50 to $60 million in some 15 to 20 companies annually, that we expect will come back to us over a three-year period," said Minhas Mohamed, a founder and managing partner of MM Ventures

Mohamed said that the reorganization had been in the works since February and closed about three weeks ago.

"It's the same sector focus, but we're doing it through a specialized financing," said Mohamed, who now serves as president and chief executive at MMV Financial. "Having this kind of a capital structure also brings down our cost of capital; we can leverage existing equity capital with debt, which effectively lowers the cost of capital."

Mohamed, along with partner Ron Patterson, will continue to seek out IT opportunities in network management, semiconductor, wireless, enterprise and automation technology, as well as life science-focused device and therapeutics deals.

MM Venture Partners made investments for five years from GATX/MM, a venture partnership with GATX, a public company that provides railcar leasing and management services. GATX had allocated 4% of its capital business to venture capital investing but in early 2003 decided to exit the venture business and re-focus all its efforts on its core business.

By December of last year, MM Venture Partners senior management had completed a leveraged buyout of the entire MM Venture Partners' portfolio, acquiring GATX's interest in the partnership with undisclosed financing from Old Hill Partners, a Connecticut-based alternative asset manager, and HSBS Capital, the merchant banking subsidiary of HBSC Bank Canada.

MM Ventures Partners and GATX were partners for five years, over which time they deployed more than C$140 million. The acquired portfolio is comprised of interests in 35 Canadian technology and biotechnology companies, including BelAir Networks, Silanis Technologies, Vixs Systems, Affinium Pharmaceuticals, and Geocom.

"We're winding that down now," said Mohamed, noting that MMV Financial does not plan to make any new investments in its previous portfolio.

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