It looks as if this year will be the last RRSP season for ENSIS Growth Fund. The fund appears destined to vanish from the investing landscape as a result of Vancouver-based GrowthWorks Ltd.’s acquisition last fall of its manager, ENSIS Management Inc. of Winnipeg.

Proposals are currently before the boards of both funds to merge the ENSIS fund, Manitoba’s sole labour-sponsored venture-capital fund, into GrowthWorks Canadian Fund, says David Levi, president and CEO of GrowthWorks.

Assuming both boards support the marriage of the two funds, Levi says, the merger proposal will then be presented for shareholder approval at the funds’ respective annual general meetings in the spring.

“The ENSIS name will disappear,” Levi says. “It will be marketed in Manitoba as GrowthWorks Canadian Fund.”

The merger presents an opportunity for ENSIS unitholders to get greater diversification, both in the number of companies in the portfolio and in the provinces in which companies are located, Levi says. Conversely, GrowthWorks Canadian Fund unitholders, who are currently restricted to investments in Ontario and Saskatchewan, will benefit from adding Manitoba-based companies.

GrowthWorks Canadian Fund manages about $375 million in assets under management, while GrowthWorks oversees almost $1 billion in total AUM. The ENSIS fund has about $90 million in AUM.

The ENSIS fund had the worst RRSP season in its 10-year history in 2007, with net redemptions of $1 million — down from net sales of $5 million in 2006, $10 million in 2005 and $15 million 2004. At the turn of the millennium, the ENSIS fund and the now-defunct Crocus Investment Fund were bringing in more than $50 million a year combined. Crocus voluntarily ceased trading more than three years ago amid serious concerns over valuations of the companies in its portfolio. It was ultimately placed into receivership.

Guy Bieber, CEO of Winnipeg-based brokerage Bieber Securities Inc. , isn’t surprised to hear the ENSIS name is on its last legs. Merging the two funds is the best way to create efficiencies, he says, including lowering the management expense ratio.

“I don’t think it makes sense to keep the name,” Bieber says. “If you’re marketing something on national scale, why have a one-off somewhere?”

Levi’s plan is to keep the ENSIS investment team and staff, which total more than a dozen people. That doesn’t include Jenifer Bartman, ENSIS’ chief financial officer, and Ken Bicknell, its vice-president, who will leave the fund at the end of May and February, respectively. Their departures come a few months after long-time CEO Bill Watchorn stepped down and was replaced by Levi. Watchorn is still a director of ENSIS.

“We’re not downsizing the ENSIS office. These are three people who wanted to retire and sell [their shares],” he says.

Bicknell says he and Bartman are on “transitional contracts” that were signed prior to the GrowthWorks transaction and they will fulfill their obligations until the contracts expire. He says their goal is to remain a team and look to launch an institutionally backed subordinated-debt fund or buy an operating business.

Analyst Dan Hallett, president of Windsor, Ont.-based Dan Hallett and Associates Inc., says it makes sense for GrowthWorks to keep the ENSIS investment team — at least, for the short term — because of their intimate knowledge of their investee companies and the local market: “They have the relationships; it just makes sense to keep them on. It’s not like taking over a stock portfolio in which everybody is following the same public companies.”

Ultimately, Hallett expects some rationalization of staff. “Part of how you make an acquisition financially feasible is you cut costs,” he adds. “Unfortunately, that means cutting people and job losses.”

GrowthWorks is searching for a new chief financial officer and plans to have one in place before Bartman’s contract is up. “A standard search will run two to four months,” Levi says. “We’re a month into that process.”

The one negative for Growth-Works is it’s an unknown entity in Manitoba, Bieber says. “It will take it a few years to gain some serious traction and get the message out about the quality of people, the bigger scale and diversity in the portfolio,” he says. “GrowthWorks has to get those positive messages out. Manitobans will take a good, hard look at it.”

GrowthWorks’ acquisition of ENSIS marks the end of a more than two-year odyssey to enter the Manitoba market. It first made overtures to purchase the Crocus portfolio in the spring of 2005. IE

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