Skylon Advisors Inc. today announced it has agreed to sell the VentureLink Group of Labour-Sponsored Investment Funds to the funds’ current management team.
Under the agreement, Skylon will dispose of its management contracts for the six VentureLink Funds and related Community Small Business Investment Funds to a new entity that subsequently will be acquired by Geoff Horton, John Varghese and Jim Whitaker.
Skylon’s parent company, CI Financial, will continue to provide administrative and other services to the funds, which had $194 million in assets as of September 30.
The sale is expected to close later this year, subject to regulatory approvals, other conditions and the required notification to the investors in the affected funds.
With this transaction, Skylon and CI will no longer manage labour-sponsored investment funds. Skylon, which was purchased by CI in November 2003, will continue to develop and manage closed-end funds and other structured products such as equity-linked notes.
The firms report that the agreement was reached after the Ontario government announced on September 30, that it will not eliminate its labour-sponsored investment fund tax credit for another six years, until the 2010 tax year. An earlier agreement announced in August to sell the VentureLink Funds management business was put on hold in early September after the province first announced it would end the 15% labour fund tax credit as early as the 2005 tax year.
The tax credit will now remain at 15% until the end of the 2008 tax year, before being reduced to 10% and 5% in 2009 and 2010, respectively. The Ontario government announcement does not affect the 15% federal tax credit.
“We are pleased to proceed with the sale of the VentureLink Funds to their proven management team, which ensures continuity for the investors in the funds,” said David McBain, Skylon president and CEO, in a release. “The fact that the full Ontario tax credit will be in place for another four years provides additional stability for the funds and the
industry.”
“VentureLink is very well positioned as we enter a new stage in the funds’ development and growth,” said Varghese, a managing director of Skylon.