Covington Capital Corporation Announces Proposed Acquisition of VenGrowth
Investment Funds and New Generation Biotech (Equity) Fund Inc. by Covington
Fund II Inc.

TORONTO, Oct. 12 /CNW/ - Covington Capital Corporation ("Covington") announced today that Covington Fund II Inc. has entered into a Definitive Purchase Agreement with VenGrowth Investment Fund Inc., The VenGrowth II Investment Fund Inc., The VenGrowth III Investment Fund Inc, The VenGrowth Advanced Life Sciences Fund Inc., and The VenGrowth Traditional Industries Fund Inc. (collectively the "VenGrowth Funds") and the New Generation Biotech (Equity) Fund Inc. ("NGBE"), whereby Covington Fund II Inc. ("Covington Fund II"/"Fund II") will acquire all of the assets of each of the VenGrowth Funds and NGBE Fund in exchange for Class A shares of Covington Fund II to be distributed to VenGrowth and NGBE shareholders.

The transaction would result in one of Canada's largest and most highly diversified retail venture capital funds.  Immediately prior to the transaction, the combined net assets of Covington Fund II, the VenGrowth Funds, and NGBE are expected to be approximately $425 million.  The combined fund will hold approximately 55 venture investments in its portfolio.

In addition, Covington Fund II has secured, subject to closing conditions, third party financing of up to $60 million from Paul Capital Advisors, LLC. The debt facility will be available to support the Fund II's on-going liquidity requirements.

"We are extremely pleased to have Paul Capital involved in this transaction.  Their participation in this transaction will provide Covington Fund II the resources necessary to complete the acquisition by providing an important liquidity option to shareholders," states Phil Reddon, Managing Partner, Covington.

Covington Fund II will continue to remain open to new fund raising and to roll-overs.  "The consolidation of seven funds, with its economies of scale and mature portfolio, provides a very attractive retail venture capital model to both current and future investors on a go-forward basis," notes Scott Clark, Managing Partner, Covington.

"We believe that under the new combined platform, Covington management, with its years of experience in both institutional and retail venture capital and its strong performance track record, has the capability to deliver performance to shareholders." says David Ferguson, Managing General Partner, VenGrowth.  "Importantly, this transaction also provides enhanced liquidity options to shareholders."

The proposed transaction is being recommended by the Board of Directors of each of the seven funds.

It is anticipated that subsequent to receipt of regulatory approvals, requisite shareholder approvals and other conditions to the proposed transaction are satisfied, the transactions will close simultaneously during the fourth quarter of 2010.  There can be no assurance that all conditions to the completion of the transactions will ultimately be achieved.

About Covington Group of Funds

Established in 1994, Covington Capital Corporation is one of Canada's largest providers of venture capital investment funds.  Managing over $200 million in assets, Covington provides Canadians with the ability to access venture capital investment opportunities via their suite of retail venture capital product offerings.
www.covingtoncap.com

About VenGrowth Asset Management Inc.

A premier Canadian private equity investment group, VenGrowth Asset Management builds innovative companies into global successes. Since 1982, we have invested over $1.3 billion in more than 200 North American companies, working alongside business owners to maximize potential.  For more information, visit www.vengrowth.com

For further information:

Fiona Robertson
EVP Sales and Marketing
Covington Group of Funds
416-365-9155
[email protected]