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Rand Capital’s portfolio jumps 12 percent after big gain on Liazon sale

The sale of Buffalo health insurance exchange operator Liazon Corp. was a bonanza for Rand Capital Corp.

The Buffalo venture capital firm was an early investor in Liazon, and when the health exchange operator was acquired by Towers Watson last November for $215 million, Rand’s $1 million investment in the company suddenly was worth more than $7 million.

“The impact of the Liazon transaction is significant,” said Daniel P. Penberthy, Rand’s chief financial officer.

Just how significant was apparent when Rand released its fourth-quarter portfolio valuations, which showed that the value of the venture capital firm’s investments had jumped by 12 percent.

The Liazon sale, which earned the company a $6.25 million profit, also left Rand in a strong cash position, with nearly $9.8 million on its books – cash that it can use to fund future investments. In fact, the cash that Rand has amounts to $1.52 per share, or a little less than half of the firm’s $3.12 mid-afternoon price on its stock Thursday.

Rand also has been using its cash to buy back its shares throughout the past year, mainly because the company’s stock trades at a 29 percent discount to the current value of its investments. Rand repurchased about 3 percent of its outstanding shares during 2013 at an average price of $2.91 per share, which averages out to a 34 percent discount to its current net asset value.

Overall, Rand said the value of its investments jumped to $28.1 million, or $4.38 per share, at the end of December, up sharply from $25.1 million, or $3.90 per share, at the end of September.

The company made investments totalling $2.2 million in six different companies during the fourth quarter, including an initial $250,000 equity stake in Knowlegdge Vision Systems, a Lincoln, Mass., company that provides services to turn presentations and Internet content into an interactive online video experience.

Rand also make additional investments in five other companies where it already held a stake, ranging from $891,270 in Rheonix Inc., an Ithaca maker of microfluidic testing devices, and $300,000 in Sci Apps, a Massachusetts manufacturer of hand held analytical instruments, to $200,000 in First Wave Products Group, a Batavia medical products firm.

Rand also invested an additional $100,000 in Mezmeriz, an Ithaca maker of micro-electronic mechanical systems, and $250,000 in QuadPharma, a Clarence company that does small-scale drug manufacturing for the pharmaceutical industry.