VenGrowth Asset Management has signed a letter of intent to sell the business of Criterion Investments its mutual fund business, to First Asset Capital Corp., the company said Thursday.

“Criterion is an innovative company that VenGrowth has nurtured over the past few years and we trust it will blossom within First Asset,” says Mike Cohen, managing general partner of VenGrowth.

“This transaction allows VenGrowth to dedicate itself fully to its private equity business while still participating in the future success of Criterion and First Asset through a minority equity interest resulting from the transaction,” Cohen adds.

It is the intention of First Asset that Criterion will retain its brand, its fund line-up and its sub-advisors.

“The fit for First Asset is excellent. In particular, Criterion’s fund line-up, its refreshing investment philosophy and its marketing prowess are attractive to us. We anticipate considerable synergies and strong growth resulting from the combined First Asset and Criterion family of funds,” says Barry Gordon, CEO of First Asset.

Criterion launched Canada’s first water infrastructure fund and first global clean energy fund. Its investment philosophy is to offer funds that can add value based on thematic trends, risk mitigation or sought-after portfolio management talent.

First Asset offers a variety of tax-effective investment vehicles including TSX-listed investment funds, mutual funds, principal-protected notes and flow-through limited partnerships. In addition to its family of internally managed investment funds, First Asset provides Canadian investors with access to some of the world’s most recognized and respected investment managers. Having managed investments on behalf of individual investors since 1996, First Asset is one of the largest managers of TSX-listed investment funds in Canada.

The transaction is still subject to satisfactory completion of due diligence by both parties, the completion of a definitive purchase and sale agreemen. Closing is expected in in the second quarter of 2009.