Venture
Investments as at November 1, 2005
Name and
Address of
Issuer |
Nature of Principal
Business |
Number of Shares or Par
Value |
Type & Percentage
of Securities of any Class Owned by the Fund |
Percentage of Value
of Fund’s Assets Invested as at November 1, 2005 |
Biofuel Energy
Solutions, Inc.
(BESI)
352 Queenstown Street, St. Catherines ON, L2P 2X4 |
Serves energy intensive customers
who want to manage their energy cost by reducing their
use of fossil fuels through the on-site generation and
efficient use of biofuel |
49 |
Preference Shares 100%
(Represents 49% of
common shares on
conversion)
$1.6 million debenture (100%) |
6.3% |
St. Leon Wind
Energy GP, Inc.
2845 Bristol Circle, Oakville ON, L6H7H7 |
Corporation established to develop, construct and then
operate a 99MW wind energy project
|
$1.6m |
Debt Only |
6.3% |
W. S. Nicholls
Construction, Inc.
48 Cowansview Road
Cambridge, Ontario N1R 7N3
|
Constructs and/or leases energy assets to energy producers
and consumers
|
$1.6m |
Debt Only |
6.3% |
High Park Hydro Inc.
263 Roncesvalles Ave. Toronto, Ontario M6R 2L9 |
Consults to large energy producers
on issues of government policy |
49 |
Preference Shares 100% (Represents 49%
of common shares on conversion)
Debentures totalling $1.6 million
|
6.3% |
Twin Falls LP
3133 Greenfield Road, RR#1 Ayr, Ontario N0B 1E0 |
Owns and operates a 5.0 MW hydroelectric
generating station |
$2.15m |
Debt Only |
8.4% |
398923 Canada Inc.
1220 Shouldice Side Road, RR#4, Cambridge, Ontario N1R 5S5
|
Corporation established to develop, construct and
then operate hydroelectric projects
|
49 |
Debentures totalling $1.6 million |
6.3% |
BIOX Corporation
125 Lakeshore Road East Oakville, Ontario L6J 1H3 |
Produces Bio-diesel |
$2.5m |
Debt Only |
9.8% |
AirSource Power Fund II LP
199 Bay Street, Suite 2300, Toronto, Ontario
M5L 1A9
|
Corporation established to develop,
construct and then operate a 90MW wind energy project |
$910,000 |
Debt Only |
3.6% |
The Algonquin Power Venture Fund aims to provide investors with
potential for predictable yield and long-term capital appreciation
by investing in a diverse group of small and medium-size Canadian
businesses primarily engaged in electric power generation, distribution
and infrastructure.
Currently, there are approximately 120 facilities owned and
operated by independent power producers in Ontario. Independent
power projects generate electricity using a variety of technologies,
including small hydroelectric facilities, solar and wind powered
generating stations, landfill gas and wood waste powered facilities
and natural gas powered cogeneration plants. While some independent
power projects are based on emerging technologies, most independent
power projects are constructed using proven technology, such
as hydroelectric or natural gas combustion turbines.
In addition, most independent power projects have less than
$50 million in assets and 500 employees so they naturally fit
the eligible business criteria for labour sponsored investment
funds. As a result, the manager has qualified the Algonquin
Power Venture Fund as a labour sponsored investment fund. The
manager believes, that the 30% tax credit available to retail
investors as a result of the Algonquin Power Venture Fund being
a qualified labour sponsored investment fund results in the
investment opportunity being even more appealing.
The investment strategy for the Algonquin Power Venture Fund
has three key components: (1) a risk reduction strategy, (2)
a return enhancement strategy and (3) a predictable exit strategy.
These strategies are:
Risk Reduction Strategy
- Harness the stability of the electric power generation,
distribution and infrastructure industry (low risk investment
class);
- Focus on companies that utilize low risk electric power
generation equipment;
- Invest in business models that base their financial forecasts
on reliable long term revenue from electricity sales; and
- Utilize Ontario’s generation capacity shortage to benefit
investors in Algonquin Power Venture Fund.
Return Enhancement Strategy
- Qualify Algonquin Power Venture Fund as a LSIF so investors
can take advantage of 30% tax credit;
- Ensure investment is RRSP eligible to maximize tax advantages
available to investors; and
- Rely on proven management that is active in the power generation,
distribution and infrastructure industry to recommend and
approve investments.
Exit Strategy
- In general, the investment guidelines governing investment
by Algonquin Power Income Fund focus on acquiring operating
independent power. Accordingly, opportunity exists for the
Algonquin Power Venture Fund to sell to Algonquin Power Income
Fund its interest in certain power and infrastructure projects
which meet the Algonquin Power Income Fund investment guidelines
after the successful completion of such projects; such transfer
would be subject to approval of the trustees of Algonquin
Power Income Fund and the Board and would be completed on
the basis of the fair market value of such project interests.
- Several consolidators in the independent power industry
would be interested in acquiring independent power projects
with an established yield.
The Fund will consider a number
of factors when making investment decisions.
Investment Structure: The Fund will, to the
best of its ability, structure investments to meet the needs
of the companies in which it is investing, while protecting
its capital, and allowing for the greatest appreciation in value
and achieving liquidity in a reasonable time frame (typically
five to eight years).
Investment Diversification: The Fund will
seek to diversify its portfolio by investing in businesses and
projects at different developmental stages.
Size of Investment: The size of an investment
will depend in part on the size of the Fund and the financial
requirements of the business or project in which the investment
is made. Generally, investments will range between $500,000
and the lesser of 10% of the outstanding equity capital of the
Fund and $15 million. The Fund’s investment may form part of
a larger investment made with other investors. See also “Co
Investing”.
Co Investing: Participation with other investors
in attractive investments will increase the Fund’s investment
opportunities and enable the Fund to share the risks. In addition,
this will leverage the Fund’s investments, thereby enabling
the Fund to invest in a greater number of eligible power businesses
and to further diversify its portfolio.
|
"The stability of the electric power generation, distribution
and infrastructure industry will be our most important risk
reduction tool."
Jeffery Norman
President
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