Portage is seeking to raise up to $1 billion to fund late-stage fintechs

NEW YORK, July 28 (Reuters) - Portage is raising a structured equity fund that will focus on financing late-stage startups in the financial technology sector that are reluctant to take a hit in their valuation amid the market downturn, the company said in a press release.

The fintech fund is seeking to raise up to $1 billion for the so-called structured equity fund, investing in securities that combine debt and equity features and do not require startups to lock in a valuation as with traditional equity fundraising, Adam Felesky, co-founder and chief executive officer of Portage, told Reuters in an interview.

“We're a liquidity provider in environments that otherwise would be quite difficult,” Felesky said.

Reuters previously reported the move.

Startups have been reluctant to launch traditional fundraisings in the financial downturn because they would be forced to accept a lower valuation than their previous funding round.

Valuations of fintech companies have tumbled this year in a broad stock market sell-off. Swedish payments firm Klarna Bank AB dropped 85% in valuation while BNPL rival Affirm Holdings Inc (AFRM.O) has shed more than 80% of its value. read more

Portage is aiming to raise $750 million to $1 billion for the fintech-focused fund, with a $200 million capital commitment, according to a source familiar with the matter. The firm is expecting to reach a first close for the fund in November this year, the source added.

The Toronto-headquartered fintech fund started discussing its planned Portage Capital Solutions Fund (PCS) with investors about a year ago, the source said.

PCS will provide capital in the fintech space in the United States, Canada, and Europe, aiming to invest in companies with a valuation over $500 million and with $100 million to $200 million in revenue.

The fund also aims to provide a capital solution for cash-strapped publicly listed companies whose shares have plunged, according to the sources. It can offer a so-called private investment in public equity (PIPE) that is less dilutive to companies.

Veteran investors Daniel Ballen and Devon Kirk will co-lead the strategy for Portage, the company said.

Portage is a subsidiary of multi-strategy alternative asset manager Sagard. Portage announced last week that it has closed on $655 million for its third flagship fund, the largest to date. It plans to invest in seed through Series C stage fintech in the United States, Europe and Canada.

Reporting by Echo Wang in New York; Editing by Robert Birsel

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