Tech Industry To Get Counsel

Toronto-based private equity firm Counsel Corp. said last week that it is shifting its industry focus away from health-care and pharmaceutical interests toward Internet, communications and other technology-based b-to-b enterprises.

The news comes on the heels of a 1999 internal assessment in which company executives 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 know 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.”

Internal Organization Mirrors Shift

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 deals and a new group dedicated to mergers and acquisitions.

Counsel 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, Houston-based emerging drug company Faro Pharmaceuticals.