Month in Review: Kensington Private Equity Fund

Activity levels have been high with three direct investments moving forward which are expected to close in the coming months and the sale of three companies being negotiated. We have described the conditions in the market in prior publications as being excellent for sellers, and conversely, we are very selective as buyers. In some sectors, prices are high and expectations of most sellers reflect those high prices. The importance of cost in a private equity investment cannot be ignored, so in a strong market like the one we are experiencing, the strength of management and their ability to execute a plan to build value is more critical than ever.

Completed commitments by the Fund in recent months were to Providence Growth Fund III, a Boston based fund focused on high growth technologically driven companies, typically companies with several hundred million dollars of revenue. Personally, we like the team and the market focus. We also like their results. The Fund also made a commitment to Georgian Partners IV of Toronto, another growth capital fund with an impressive team and strong results. In 2018, Kensington made several other investments including a private investment in Axis Auto Finance. This investment is in line with our theme of backing high-quality management teams with proven track records in a manner where our investment can contribute to a step change in value. Realizations in the Kensington Private Equity Fund included proceeds from the Whitecastle New Urban Fund, the realization by Novacap Industries of its Laces Group investment, Georgian Partners’ sale of Advanced eCommerce, and TriWest’s dividend from Northern Mat and Bridge.

As previously mentioned, the activity level in the Fund has been high. We believe this level of activity will continue through much of the year. The flow of new investment opportunities is growing and the time we are investing in reviewing those deals, before selecting the ones that we believe may fit our criteria, is significant. The key focus we have is the quality of management and we believe that Fund investors will be very pleased with the management of both the new fund commitments and the direct investments that have been completed.