VANCOUVER, British Columbia, Nov. 24, 2022 (GLOBE NEWSWIRE) — (TSXV:PTF) Pender Growth Fund Inc. (the “Company”) today announced its financial and operating results for the three months and nine months ended September 30, 2022.
Financial Highlights (unaudited)
- Net loss was $8,520,121 for the three months ended September 30, 2022 (September 30, 2021 – Net income $75,339,050), primarily the result of negative investment performance for the quarter.
- Net loss per share for the three months ended September 30, 2022 was $1.12 (September 30, 2021 – net income per share $9.89).
- Equity per Class C common share (“Share”) as of September 30, 2022 was $10.46 (December 31, 2021 – $26.08).
- The Company’s total shareholders’ equity as of September 30, 2022 was $79.3 million, a decrease from December 31, 2021 ($198.6 million) primarily due to a decrease in market prices of public company stocks during the period.
- Shares outstanding as of September 30, 2022 were 7,582,329, a decrease from December 31, 2021 (7,616,529) due to share repurchases under the Company’s Normal Course Issuer Bid (“NCIB”), which ended on September 14, 2021. February 2022 renewed.
- As of September 30, 2022, 81.1% of the investment portfolio was made up of private companies and 18.9% was made up of public companies. However, combined with the Company’s indirect exposure to public companies through its investments in Pender Private Investments Inc. (“PPI”) and Pender Private Debt Opportunities Fund I Limited Partnership (“PPDF”), public companies make up 86.2% of the Company’s holdings .
- The management expense ratio (“MER”) excluding performance fees was 2.35% for the three months ended September 30, 2022, an improvement of 1.95% compared to the third quarter of 2021.
(based on equity)
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The Company’s portfolio is primarily focused on the shares of a public portfolio company, Copperleaf Technologies Inc. (“Copperleaf”). As of September 30, 2022, taking into account both its direct investment and its indirect investment through its ownership of PPI stock, the Company held 6,762,065 shares of Copperleaf worth $42,465,767, representing 53.5% of the Company’s total equity of $79,305,495 (December 31, 2021 – 7,455,638 shares valued at $177,816,957, representing 90% of the Company’s total equity of $198,643,655).
During 2021, Copperleaf went public and its closing price on December 31, 2021 was $23.85 per share. This resulted in a significant direct and indirect unrealized gain under IFRS. These unrealized gains were a significant contributor to the increase in the Company’s equity for 2021, which increased from $47.3 million at the beginning of 2021 to $198.6 million at December 31, 2021.
As of September 30, 2022, Copperleaf’s closing price was $6.28 per share, a decrease of $17.57 per share from the December 31, 2021 closing price of $23.85, resulting in a large reversal of unrealized appreciation , which was recorded on the Company’s stock Holdings in Copperleaf in 2021, which was a major contributor to the decrease of $119,338,160 (60.1%) in the Company’s total equity, down from $198,643,655 or $26.08 per share as of December 31, 2021 to $79,305,495 or $10.46 per share as of September 30, 2022.
During the nine months ended September 30, 2022, the Company sold a total of 745,532 shares from its direct and indirect interests in Copperleaf. In November 2022, Copperleaf shares were trading below $3.50 per share, well below its September 30, 2022 closing price of $6.28 per share. There can be no assurance that the Company will be able to realize the value of this investment.
The move by central banks to reduce monetary and fiscal stimulus and raise interest rates to control inflation, the conflict between Russia and Ukraine and the ongoing impact of the global health pandemic COVID-19 raised concerns about the outlook for economic growth and led to volatility in stocks as the uncertainty caused by these developments was digested. Today, we believe the company remains well positioned to pursue its investment objectives despite the current market volatility and valuations of micro and small-cap stocks in North America.
As always, we worked closely with our private portfolio companies and some of our public portfolio companies this quarter.
Significant equity investments and recent developments
Pender Private Investments Inc.
As of September 30, 2022, the Company owned approximately 98% of Legacy shares of PPI, formerly Working Opportunity Fund (EVCC) Ltd. (“WOF”). These shares were acquired in May 2021 by shareholders of WOF (“Exiting Shareholders”) as part of the previously announced transaction (the “WOF” Transaction”) and in post-May 2021 transactions.
Copperleaf Technologies Inc.
As of September 30, 2022, the Company owned 9.6% of Copperleaf’s issued and outstanding shares, both directly and through its investment in PPI. The value of the Company’s direct and indirect interests in Copperleaf as of September 30, 2022 was $42,465,767, representing 53.5% of the Company’s total equity.
D-Wave Quantum Inc.
On August 8, 2022, D-Wave announced the completion of its previously announced intention to list on the New York Stock Exchange as a publicly traded SPAC with the name D, following a business combination with DPCM Capital, Inc. and D-Wave Systems Inc. – Wave Quantum Inc., under the symbol QBTS. The Company holds shares in D-Wave both directly and indirectly through Pender Private Investments Inc. and all of its shares are subject to a lock-up period1. There is no guarantee that the value of D-Wave shares will be realized after the lock-up period has ended.
We have continued to purchase shares of the company in the market under our NCIB because we believe the shares are trading at a discount to their intrinsic value. On February 14, 2022, the Company implemented a new NCIB under which the Company may acquire a maximum of 678,839 shares or 10% of the Company’s public outstanding at the Inception Date during the one-year period ending February 13, 2023.
We encourage you to refer to the Company’s MD&A and unaudited quarterly financial statements for the year ended September 30, 2022, audited financial statements for the year ended December 31, 2021 and other disclosures available in the Company’s profile at www.sedar. com for more information.
about the company
Pender Growth Fund Inc is an investment firm. Its investment objective is long-term capital growth. The firm uses its small capital base and long-term horizon to invest in unique situations, primarily small cap, special situation and illiquid public and private companies. The firm invests in public and private companies primarily based in Canada and the United States, primarily in the technology sector. It trades on the TSX Venture Exchange under the symbol “PTF” and reports its NAV on its website, generally within five business days of each month end.
Please visit www.pendergrowthfund.com.
For more information please contact:
Pender Growth Fund Inc.
Toll Free: (866) 377-4743
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release may contain forward-looking statements (within the meaning of applicable securities laws) regarding the Company’s business and the environment in which it operates. Forward-looking statements are identified by words such as “believe”, “anticipate”, “project”, “expect”, “intend”, “plan”, “will”, “may”, “estimate” and other similar expressions. These statements are based on the Company’s expectations, estimates, forecasts and projections and include, without limitation, statements about the Company’s reduced portfolio risk and future investment opportunities. The forward-looking statements in this press release are based on certain assumptions; they are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. A number of factors could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to those factors described under the heading “Risk Factors” on the Company’s annual information form available at www.sedar .com There can be no assurance that forward-looking statements will prove to be accurate, as actual outcomes and results could differ materially from those projected in these forward-looking statements. Therefore, readers should not rely on such forward-looking statements. In addition, these forward-looking statements speak as of the date of this press release and, except as expressly required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
1 The lockup period will be the shorter of (A) six months after closing and (B) the date on which the last reported selling price of the QBTS reaches or exceeds $12.00 per share for twenty trading days within a thirty consecutive trading period that after the ninetieth day after graduation