Canadian Business Growth Fund, a mid-market fund launched this year with the backing of 13 financial institutions, is led by a former buyout pro turned business operator.
George Rossolatos, CBGF’s CEO since January, learned the private equity trade while working with Brent Belzberg, one of Bay Street’s most storied investors.
Rossolatos was with Belzberg for nearly a decade, first at listed merchant bank Harrowston, sold in 2001 to TD Capital, and then at TorQuest Partners, a firm they co-founded several months later.
TorQuest went on to become one of Canada’s foremost mid-market PE firms, overseeing more than $2 billion in capital. Rossolatos spent seven years there as a partner, a job that afforded exposure to a wide scope of North American companies and sectors.
In 2009, Rossolatos left TorQuest, deciding he “wanted to run a company” and accumulate “experience as an operator,” he told PE Hub Canada.
After exploring a number of opportunities, he invested in Avante Logixx, a security-tech provider that had fallen on hard times. Becoming CEO, Rossolatos and his team turned the company around, wiping out its debt and quadrupling revenue.
Rossolatos, 46, says the 17-year journey to Avante from Harrowston, which put him on both sides of the financing table, was “great training” for the new role at CBGF.
Conceived in 2017 by Ottawa and financial executives, CBGF aims to fill the unmet or under-met funding needs of small businesses in Canada.
Its focus, which Rossolatos describes as “starting where the banks stop,” is to supply equity and debt financing solutions, tailored to a company’s specific capital structure and demand requirements.
The fund will be a minority investor, ensuring that owners and entrepreneurs remain in the driver’s seat. It will also be a patient investor, holding stakes beyond the usual PE horizon of three to seven years.
CBGF was patterned after Britain’s BGF, which since 2011 has invested £1.4 billion ($2.4 billion) in 220 companies.
And like BGF, which was founded with the support of such U.K. financial majors as Barclays, Lloyds and RBS, CBGF is backed by Canada’s top banks and insurers.
In June, CBGF’s evergreen pool was capitalized at $545 million by BMO, CIBC, RBC, Scotiabank, TD, ATB Financial, Great-West Life, HSBC Canada, Manulife, National Bank, Sun Life, Canadian Western Bank and Laurentian Bank.
The pool will receive additional commitments as needed, Rossolatos said. Over 10 years it is projected to reach $1 billion.
Rossolatos has recently given priority to opening CBGF’s doors at a fully resourced Toronto office. He says the fund is now starting to look at deal opportunities that reflect “ambitious entrepreneurs driving proven business models with significant growth potential.”
CBGF is targeting companies with $5 million-plus in annual revenue. It will invest $3 million to $20 million in as many as 10 companies per year, sometimes in partnership with other like-minded investors.
Dealmaking will be coast-to-coast and in a variety of industries, though activity will most likely emphasize manufacturing, service and tech companies, Rossolatos said. He expects to build a portfolio that is a “microcosm of the Canadian economy.”
A central tenet in CBGF’s mission is encouraging successful owner-operators to build larger companies instead of slowing down or selling early, which is often the result of too few funding options, Rossolatos said.
“We want to help entrepreneurs navigate the complex stages of getting to a bigger business, to grow revenue from $5 million to $50 million or higher,” he said.
CBGF will do this by taking board seats and providing advice, coaching and access to talent pools. Rossolatos says a source of value-adding capability will be the networks of the fund’s institutional backers.
Rossolatos has so far assembled a team of 12 investment pros and other staff and remains in hiring mode.
They include Senior Investor Dale Tingley, formerly a managing director at BMO Capital Partners and CAI Capital Management, and Senior Investor Hai Tran-Viet, formerly a vice president at Regimen Partners and partner at Signal Hill Equity Partners.
CBGF is chaired by Dale Ponder, a co-chair of Canadian law firm Osler, Hoskin & Harcourt.