Toronto-based private equity firm Counsel Corp. announced last week that it is shifting its industry focus away from health care and pharmaceutical interests and toward Internet, communications and other technology-based business-to-business enterprises.
The news comes on the heels of an internal assessment in 1999 in which executives of the publicly listed company decided that Counsel’s investment focus needed to be broadened, in part, to include the booming tech sector. While the company immediately began taking stakes in companies like Delano Technology Corp. and Hip Interactive Corp., there was no official mention of abandoning the health care market until last week.
“One of the key ingredients to being a successful public company is that you need to have appropriate analyst coverage,” said Allan Silber, chief executive of Counsel. “But our split focus had made it difficult for us to fit in because banks didn’t no whether to give us a health care analyst or a tech analyst so we’ve decided to focus on one business segment so as to create value for our shareholders.”
Beyond its industry shift, the company has also undergone a structural reorganization capped off by the hiring of Douglas Knight, former publisher and chief executive of The Toronto Sun. Knight will be a managing director in charge of creating a Canadian investment strategy. He will also be responsible for a recent 26% investment in INT Technologies Inc. and a 39% deal with Core Communications Corp.
Overall, the firm will be split into three teams with one engaging in the acquisition of major ownership interests, one dealing with venture capital and a new group dedicated to mergers and acquisitions. It has also divested itself of all but one of its health care assets. Silber said that he was currently undergoing a review of how best to maximize Counsel’s 87% stake in the remaining company, Faro Pharmaceuticals.