Reuters’ Greenhouse gets some air

A new company, to be called RVC, and headed by the Greenhouse Fund's co-chief executives, will manage Reuters' corporate venturing fund as well as launch its own new fund.

Reports today suggest that Reuters will confirm later this week that its Greenhouse Fund will be spun off as a separate company to be known as RVC, standing for Reuters Venture Capital.

As reported by PEO last week, this company will be backed by new investors and co-chief executives of the Greenhouse Fund, John Taysom and David Lockwood, will run it. The company will have offices in Mayfair, London.

This news comes at a time when many are debating the merits of companies running their own venture capital funds amidst rumours that many such funds are sitting on portfolios worth far less than the sums invested [see last week's PEO newsletter A Coming of Age for Corporate Venturing].

In such a context it's significant that the Greenhouse Fund has been able to realise significant returns (nearly $300m) whilst retaining a shareholding in a portfolio of companies that CSFB recently valued at $400m. Reuters had originally invested around $400m.

The decline in internet company valuations had encouraged some to question the value of the Greenhouse Fund to Reuters, despite it having contributed 9 per cent of the company's earnings last year. More fundamentally, analysts were reluctant to incorporate the Fund's contribution when valuing Reuters on account of the perceived volatility of its earnings.

The new company is planning to launch a new fund of circa $250m. Whilst there had always been the aim to invest in companies that used technologies or offered products and services relevant to Reuters with the Greenhouse Fund, this new fund will invest in companies outside the original Fund's remit. Reuters is expected to be a minority investor in the new fund.

RVC will continue to manage the Greenhouse Fund on behalf of Reuters but there will be no Reuters executive sitting on its board and neither will Reuters have the right of veto on new investments made by RVC.