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HomeBusinessWhither the Working Opportunity Fund?

Whither the Working Opportunity Fund?

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Bob Mackin

A labour-sponsored investment fund with historical ties to the NDP will finally hold its annual general meeting next month, after two significant delays. 

The AGM for the Working Opportunity Fund (WOF) is traditionally in December. Late last October, however, it received an extension from the Registrar of Companies to delay 2017’s meeting until the first quarter of 2018. On May 3, it issued notice that it would finally happen on June 27, three days shy of the end of the second quarter. 

In an interview, David Levi, executive vice-president of WOF-manager GrowthWorks Capital, hinted to some changes on the horizon. 

“The board is doing some work on a variety of different options and they wanted more time in order to be able to do that, so that if they choose to make some changes that they would be able to do that at an annual meeting and they weren’t going to be ready in the early spring,” Levi said. “They recognized that and that’s why they delayed it.”

Levi, son of former B.C. NDP cabinet minister Norm Levi, was CEO from WOF’s 1992 inception until October 2016. The former chair of VanCity Credit Union founded GrowthWorks in 1998 and it became WOF’s manager a year later. GrowthWorks’ latest five-year management contract with WOF expires at the end of 2018. 

WOF has invested more than $600 million in over 130 companies during the last 26 years, but froze redemptions for unit holders of one of its two investment pools in 2013 over liquidity concerns. 

Five years ago, GrowthWorks admitted that a B.C. Securities Commission audit found deficiencies in its compliance procedures and internal controls. GrowthWorks disagreed, but said it would cooperate. 

Levi was asked whether the annual general meeting delay could be related to internal discussions aimed at converting units to publicly traded shares for listing on the Toronto Stock Exchange. He declined to comment, citing disclosure regulations around WOF’s quasi-public company status. 

WOF has two investment pools, the venture series and commercialization series, which count 17,200 and 2,500 shareholders respectively. The venture series held investments in 16 private companies last year, but suffered a nearly $29 million depreciation. It did not generate sufficient liquidity, so there was no dividend for venture shareholders. 

WOF board has representation from the B.C. Federation of Labour and four big unions.

The annual report said “certain portfolio companies did not meet expectations for revenue growth, profitability or technical milestones during the year.”

One of those companies, BuildDirect.com Technologies, was written down to nil value after it failed to complete equity financing last October. On Oct. 31, 2017, the home improvement e-tailer received creditor protection. It reorganized and exited creditor protection on March 26. 

The WOF commercialization series had a net asset value of $28.9 million as of last Dec. 31, which included investments in eight portfolio companies and $8.1 million of net asset value in liquid assets.

“Commercialization is still open for redemption and operating normally,” Levi said. “The venture pool ceased redemption about three, maybe four, years ago. The board did a full review and decided the best way to pay everybody out was as we sold off the companies that we’d return it to people in the form of dividends, that was voted on by shareholders.”

Levi said the difficulty in the venture pool is that WOF is a minor investor without controlling interest in the companies. 

“The companies we invest in we can’t sell until all the shareholders agree to do so. A number of our companies are doing well in the portfolio, and so people are the other shareholders saying they want to wait until we can maximize the value.”

Levi said the process for WOF renewing with manager GrowthWorks is underway. He said WOF has enough cash on hand to operate for 18 to 24 months, “by which time we will no doubt have sold one or two other companies. We’re a fairly minor expense of the overall contextually, we have cash on hand which would be sufficient for 18 months to two years.”

In the latest annual report, $868,470 was spent by WOF on management and administration for the commercialization pool and $3,708,764 for venture. 

Could WOF be traded on a Toronto exchange?

WOF’s board includes senior executives from the B.C. Federation of Labour, Canadian Union of Public Employees, United Steelworkers, MoveUP and UNITE HERE.

As of March 28, 2018, Levi had 49% of shares in GrowthWorks Capital’s parent company, GrowthWorks Ltd. The other 51% was held by Working Enterprises Ltd., a private entity owned equally by BC Fed, B.C. Government and Service Employees Union, CUPE, Health Sciences Association, International Longshore and Warehouse Union, MoveUP and USW. 

Elections BC’s database shows that Working Enterprises companies have donated $21,890 to the NDP since 2005. 

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