This week is expected to bring news of a $50-million fund specializing in debt
financing for companies in the information and biotechnology sectors.
The GATX/MM Venture Finance Partnership is the result of co-operation between
GATX Venture Finance Canada Inc., a subsidiary of San Francisco's GATX Capital
Corporation and Toronto's MM Venture Partners. It will provide working capital
loans, software leases and equipment leases to venture-capital-backed emerging
Canadian growth companies.
"The fund will offer the opportunity for high growth companies in the information
technology and biotechnology sectors to augment venture capital funding with less
dilutive long term capital," said Minhas Mohamed, managing partner at MM Venture
Mohamed was with Quorum Growth Inc. before branching out with his own venture.
He was a director of publicly trade Quorum as well as a partner of Quorum Funding
Corporation, which managed the investments.
Quorum Growth, which has assets of $90 million, was taken private last year. When
it was public, the company, headed by chief executive Wanda Dorosz, described
itself as a provider of "expansion capital to Canadian emerging growth companies
concentrated in high growth industries, including information technology, financial
services technology, consumer product distribution, niche manufacturing and environmental
Quorum's a high-profile board included former politicians Peter Lougheed, David
Peterson and Michael Wilson, and over the years it has backed many Canadian companies.
Its 1996 annual report indicates 16 such investments. Of these, six were public
- PC Docs Group International Inc., WildCard Technologies Inc., ISG Technologies
Inc., Home Products Inc., InsulPro Industries Inc. and Promis Systems Corporation.
Mohamed expects a typical investment to be between $1 million and $5 million.
The plan is to invest in companies with "strong market positions, experienced
management teams and proprietary products and services, with the potential to
become dominant in their markets." While debt will be the focus, investments will
"normally" be structured to include equity, generally in the form of warrants.
Chicago-based GATX Corporation is listed on the New York Stock Exchange (GMT/NYSE)
and has five major subsidiaries, including GATX Capital in San Francisco. It describes
itself as a full-service lessor of rail tank and freight cars, and its financial
services focus on owning or managing transportation and distribution assets.
GATX Capital owns or manages more than US$10 billion of equipment assets. "We
do a wide variety of financial transactions," said manager of communications Aaron
Hoffman, adding the company has already invested US$200 million in the information-technology
and life sciences sectors.