by Barry Critchley
The Financial Post, Friday, June 7th, 1996, p. 5.

TORONTO - Those who think they have a flair for naming companies should call Griffiths McBurney & Partners, one of the country's newest institutional-equity boutiques. The firm, started last summer, is in the throes of forming a new merchant-banking venture that, as yet, doesn't have a name.

"We aren't sure whether to use a generic name or one that includes the name of the principals, but it will be finalized in short order,'' said co-founder Gene McBurney. He added that Griffiths McBurney is "a couple of weeks away'' from unveiling and funding the new entity, which will be ``totally separate'' from the firm's core business. Until a name is chosen, Griffiths McBurney will work on a shareholders' agreement and finalize the way the investments made by the entity are going to be structured.

The new venture will be run by John Albright. He'll hire the necessary staff, but he will be able to call on the resources of Griffiths McBurney for advice on particular investments. Albright is a veteran of venture capital and merchant banking, having worked at First City Capital Markets, North American Life and Jefferson Partners Group Inc. While at Jefferson, he played a key role in developing iStar Internet Inc., which was taken public last year. He was also an early investor in Wescam Inc., Sidus Systems and First Service Corp.

The new venture expects to make two or three strategic investments a year. All of them will be in high-growth sectors such as technology and manufacturing. No investments will be made in the resource sector, real estate or retail. As well, the investments will all be in private companies and will be undertaken with a pre-determined exit strategy. ``We will get involved in the management and grow the investments with a view to taking them public or some other exit strategy over a three-to-five year period,'' McBurney said.

The new venture was formed because of the opportunities, he said. ``This is a growth sector. It is very complementary to our business, and [the venture] is a way to allow us to develop product in-house.”

Adds Albright: "A typical investment would be in the range of $3 million-$5 million, which would give us not less than 25% ownership in the issuer. Typically, the investee company would have sales of $1 million-$10 million and be growing at not less than 25% per annum. And we won't do unfriendly deals, though we will always have board representation.''

Unlike some other venture-capital firms that have been formed by dealers -- such as Gordon Investment Corp., created in the mid-1980s and now wound down -- the new venture won't have any outside investors. CIBC Wood Gundy Capital currently ranks as the largest dealer-run merchant-bank/venture-capital entity.

The new venture will be capitalized by the venture's principals and the brokerage firm. However, the new firm will make room at the top if it finds an operator who will become part of the management team. ``They will want the opportunity to participate,'' Albright says.

If there is a model, McBurney says that it may be Jefferson Partners, the venture-capital firm run by David Folk and Jack Kiervin. That firm arranged some funding for iStar, helped the company grow and assisted with some acquisitions before taking it to Griffiths McBurney. Jefferson Partners then provided additional financing before iStar was taken public.