Redemptions & Rollovers
As a result of dispositions of our investments in various companies, WUTIF can, from time to time, offer redemption and re-investment opportunities to its investors. The proceeds that are received when our shares in an investee are sold, are made available to investors who wish to, and are eligible to, redeem their shares. Such proceeds are not re-invested nor are dividends paid. This allows investors to cash in if they so choose.
Normally, in order to receive the 30% refundable tax credit, investors must commit their capital for a 5-year period. This is because it normally takes at least 5 years for an investment in a startup company to mature and pay off. In fact, it usually takes much longer than 5 years. This means that early investors in WUTIF have waited much longer than 5 years before WUTIF received a cash payout in order to offer redemption opportunities. However, due to the large portfolio of companies, exits are occurring more frequently now and the hold period iscloser to 5 years.
WUTIF’s policy is to notify all of its shareholders whenever it is possible to offer share redemptions. Any shareholders requesting a redemption will processed on a first-in first-out basis. The number of shareholders that can be accommodated will depend on the amount of cash received from any specific investment payout.
In other words, those investors that have held their shares for the longest time, will be able to redeem first. Some investors may choose to re-invest, i.e. rollover, their proceeds in which case they will again receive a 30% refundable tax credit from the B.C. Government. Some investors may decide not to rollover because they do not want to commit to another 5 years. They may decide to simply continue holding their investment. In this case, they will not lose their redemption priority. They will be first in line for the next redemption window.
Opting for a roll-over can be very attractive. For example, in August, 2018, investors were offered the opportunity to redeem and re-invest at a $14.50 per share price. Sufficient cash was received in order to accommodate approximately 30% of the investors – assuming that all want to redeem or rollover. However, since some investors will choose to simply wait, the “next-in-line” investors may then be able to redeem or rollover their shares. If an investor bought shares over a period of time, it is each share purchase date that determines redemption eligibility. That is, investors may not be able to redeem all their share purchases – only those in priority date order.
Investors were offered these choices:
Rollover all or a portion of your investment
- If you choose to re-invest and using a value of $14.50 per share, you will receive a REFUNDABLE Tax credit of $4.35 per share. This effectively reduces the cost of your current shares to $2.65 (if you paid $10 originally),
- By keeping your capital in, you will be able to take advantage of the growth of other promising companies in the portfolio.
- Also through rolling over, you will also have the opportunity to transfer ownership of your shares to immediate family.
- Redeem all or a portion of your current investment at approximately $14.50 per share
- Any shares redeemed will be immediately paid out with no further participation in gains.
- You will not lose your position in the redemption lineup on shares not redeemed.
Through either of the above options, you have the option of taking some cash out now while re-investing the balance. You could take back your initial capital. For example, if you bought shares at $10, and sell half your holdings, you’d get back more than your original investment and you’d still own half of your shares.
After the cash available for redemptions is depleted, investors will have to wait until WUTIF achieves another investment payout at which time this process will be repeated starting with the next-in-line investor (starting with those that passed up previous redemption opportunities).
Proceeds received from rollovers must, according the B.C. regulations, be used to make new investments in startups. This will allow us to build new companies and to grow the Fund’s value over time.
Determining Redemption Price
The share price for redemptions and rollovers will be based approximately on the Net Asset Value per share at the date on which redemptions are offered. The actual price will be determined by a resolution of the Company’s Board of Directors. The price may be slightly less than the Net Asset Value per share to allow for various contingencies and liabilities.
The first tranche of redemptions occurred in 2013 at $10.50/share. Approximately $500K was available and a limited number of investors were able to rollover their shares. The second opportunity occurred in October, 2017 at $13.00/share. Approximately $3 million was redeemed. The third round of redemptions took place in August, 2018 at $14.50/share. Approximately $1.3 million was redeemed. In May, 2019, a fourth round was completed at $19.50 per share for $3.17 million. In November, 2019, a fifth round was completed at $21.00 per share for $1.1 million. In November, 2020, a sixth round was completed at $22.00 per share for $1.6 million. In November, 2021, a seventh round is being completed at $25.00 per share for a total of $1.2 million in redemptions.
Because the Fund has a number of investments that it has held for as much as 10 years, more exit opportunities are expected during 2021 and 2022. As they arise, investors will be notified if they are in line to redeem shares.