Merrill Lynch Fund Expected to Meet Goal

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A venture capital fund developed to support Oklahoma-based companies is expected to post $10.1 million in total deposits from investors when it is closed Aug. 14, Quinton Ellis, Oklahoma City resident vice president of Merrill Lynch, Pierce, Fenner & Smith said Monday.

ML Venture Capital Partners, a Limited Partnership, barely met its minimum $10 million funding requirement, but Ellis is certain the fund will support the 12 to 14 investments initially planned.

"I am happy that we got the deal done," Ellis said. "It's just a start, but we have started."

The first of those investments could be funded within the next 60 to 90 days, said Joseph Tippens, vice president of Merrill Lynch Venture Capital Inc. The firm will take about 2 to 2 1/2 years to fully invest this fund, he said.

Investigative work has begun on 10 to 12 business plans harvested from the first crop received by the fund, Tippens said.

"There are a couple of transactions we've been working on very hard," Tippens said. "Unless something happens to change our minds, we will do at least one, if not both, of them."

"We'll do the first deal within the next 60 to 90 days."

Tippens expects himself and the other three managing partners of Venture Capital Partners to spend between 200 and 500 hours on each project, examining the proposed business' market, its size, dynamics and competition, where the company's products or services fit in the market, what its strategic plan is, and who the people are that will operate it. Other Merrill Lynch resources can be called in to review specific business plan areas, he said.

The people submitting the business plans are looking for non-bankable, or risk, capital and investors who provide a value-added presense," Tippens said.

"In addition to the money, we bring alot of resources to the table to help them build their companies," Tippens said.

The fund wants to invest in programs where it can be involved and become value-added investors and manage the risk in those companies.

"The level of activity varies wildly by the style of deal," Tippens said.

The fund is investing in a management team, and is supplying "a laundry list of resources for that management team to lean on to execute their business plan," Tippens said.

The fund's managers offer strategic assistance and sits on the company's board of directors, he said. They are not day-to-day managers, he said.

For the average four-to-five years that the venture capital fund would be involved in a particular project, the fund would be treated as a partner in the business with the management team and would own equity in the company alongside the management team, Tippens said.

"It does not do us any good to buy low and never sell," Tippens said. "Every deal we do has an exit plan - how to get out of the deal and give the gains to our partners (the investors). …

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