Desmarais-backed investment vehicle aims to raise $1 billion

The first $200 million raised by Portage Capital Solutions Fund came from Power Corp.

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Investment vehicle backed by Quebec’s Desmarais family set to raise $1 billion to fund investments in early-stage fintech startups in North America and Europe amid tech valuation rout .

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The first $200 million raised by PThe Ortage Capital Solutions Fund originated from Power Corp., the Desmarais-controlled financial conglomerate that counts Great-West Lifeco and Mackenzie Investments among its holdings.

But Adam Felesky, co-founder and CEO of Portage, said the rest of the money and investment focus will be outside of the Power universe.

The fund will invest approximately $100 million on average in fintech companies in the wealth management, banking and insurance industries. The amount invested may increase if there is interest in co-investments by limited partners who commit capital to the Portage fund, Felesky said.

The first fundraising is expected to close in the fourth quarter, with some anchor investments possible by then.

Felesky said target companies for the Portage Capital Solutions Fund will occupy the “corner” between start-up and growth companies and IPO-ready companies, with annual growth of 25-60%, a slower pace than a typical “growth” company.

“IIn times of market stress, that wedge widens a lot, Felesky said. “So…we think it’s particularly relevant to today’s market.”

While Portage may be best known for its venture capital and growth financing, the launch of PStorm Capital Solutions Fund comes about a year after Portage Ventures sponsored an American Special Purpose Acquisition Company (SPAC), or “blank check” company, to push its fintech strategy well beyond start-ups. Portage Fintech Acquisition Corporation raised US$240 million and secured a Nasdaq listing.

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PSPC has not yet made any acquisitions.

“It’s really just another extension of that strategy in that what we’re seeing in the market is that there are a lot of large, late-stage companies that really don’t fit into the basket of growth,” Felesky said.

He said the new Portage fund will seek out management teams and shareholder groups who want to retain control and aren’t ready to sell to private equity buyout companies doing the rounds.

“Private equity is very active and they have raised a lot of capital, and I think they will remain active,” he said, adding that he thought there was room for both strategies. .

Target companies would ideally be close to or breakeven, and “with our capital, would be on the path to profitability”, he said, adding that they would typically need 24 to 36 months to mature before to consider a “liquidity window” such as an IPO.

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Given current market conditions including rising interest rates, inflation and supply chain bottlenecks that are undermining business plans, hammering valuations and making it less attractive to operate public equity markets, Felesky said fintech companies with a strong market position could use proceeds from a Portage investment to shore up.

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The new Portage fund could also invest in convertible securities through private placements offered by public companies, he said. This would provide upside potential for the fund and be more palatable to existing public company shareholders, as it would not immediately dilute them at a time when valuations have taken a hit.

Portage has made two key hires to lead the latest fintech platform. Devon Kirk was snapped up from CPP Investments, the Canadian pension giant, where she spent 10 years in finance-focused private equity and most recently as Managing Director and Head of Capital Solutions .

Its co-head, Daniel Ballen, has spent nearly twenty years investing in private equity, structured private equity and special situations focused on financial services, fintech and real estate technology.

Prior to joining Portage, he was a portfolio manager at PIMCO, based in New York, where he led a team focused on structured equity and private equity investments in North America and Europe for the Alternatives franchise. company. He also honed his financial technology skills within the investment teams of Bain Capital and Pine Brook Partners.

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