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2022 2023
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Capital Deployment and Investments
AEC’s financial statements show total capital committed for investment of $326.4 million (2021/22 – $269.3 million). Fifteen of our investments are in US dollars and the total capital committed is therefore impacted by the weaker Canadian dollar as compared to the US dollar. The main variance to last year is the addition of new fund investments, as well as capital called by our funds for investments
and fees.
In fiscal year 2022/23, AEC disbursed
$29.9 million (2021/22 - $30.9 million) to the Limited Partnerships in which we have invested.
In order to meet our remaining commitments, the balance of committed capital is held as cash until such time as is it drawn down upon. Currently, the Corporation has $64.5 million
in cash on hand (2021/22 – $38.7 million), and another $150.2 million in accounts receivable from the Government of Alberta. The change in cash is a net result of capital disbursed to the funds and distributions received from the funds.
For the fiscal year ended 2022/23, our Partnership investments were valued at $ 203.4 million, which is an increase of $16.2 million from fiscal year ended 2021/22. The significant driver of this value growth is related to the increase of fair value of the underlying portfolio and new investments.
Changes in value form part of net assets and are not captured as income or losses (i.e. realized) until the investments are sold by the Limited Partnerships. Any unrealized gains
or losses are captured in the Statement of Remeasurement Gains and Losses. This fiscal year we had unrealized losses amounting to $1.9 million which can be compared to last year’s unrealized gains of $29.5 million. The largest fair value increase for 2022/23 relates to our clean tech fund Chrysalix. Yaletown
Innovation Growth Fund shows a decrease in remeasurement gains, however this is not a loss, it is a reclassification of an unrealized gain to
a realized gain, as Yaletown provided us with significant distributions this fiscal year.
The Statement of Operations only captures realized gains for the current fiscal year. To assess the total performance of our fund investments, rather than looking at the results for individual years, it is important to review the total value of paid in capital (TVPI) over time. Our portfolio is currently showing a TVPI of 1.35 (2021/22 – 1.45). A TVPI of >1 means the value of the investment is above the total amount
of capital invested, including management
fees. Due to the general decline in the Venture Capital market as well as an increase in capital disbursed due to new fund investments, the TVPI for 2022/23 from our funds across the portfolio is lower as compared to last year.
The financial statements are consistent with Canadian Public Sector accounting standards for investments in Limited Partnerships in
both the Private Equity and Venture Capital industries.
Finance Transition
In the past, the finance/accounting function
of AEC was performed by the Ministry under
a Shared Services Agreement. We engaged
a consultant to help plan the transition to an in-house finance function. The transition plan included the requirements for people, systems, policies and procedures. Our Chief Financial Officer was hired in November 2022, with the rest of the Finance team joining us in early 2023. The new Finance team has been working on setting up the accounting system, banking and payment functions and creating and updating policies and procedures, including internal controls framework. We ran parallel accounting system for the period of Q4 2022/23. All transactions relating to the new fiscal year 2023/24 are now being processed by the internal Finance team.