Investment program will fund businesses

The state of Nevada has $50 million to invest in technology, manufacturing, biotechnology and other industries located here or interested in moving to the Silver State.

Overseeing this private equity investment fund is the newly formed Nevada Capital Investment Corp. The investment program, which is a first for Nevada, was created by Senate Bill 75 and approved by the 2011 Legislature.

The fund's resources will come from the state's Permanent School Fund.

"We are following the example of most Western states that have implemented a more balanced portfolio," said state Treasurer Kate Marshall. "We will set as aggressive a timetable as possible so the state can begin to see the benefits ... for our schools and for economic development moving forward in Nevada."

Marshall said she wants the seven-member board to go before the 2013 legislative session with results.

The nonprofit board will hire a private fund manager to develop an investment plan and seek private equity firms to invest in Nevada businesses. The fund manager also is responsible for ensuring that 70 percent of the investments from the $50 million fund are Nevada-based.

The board expects to announce its first investments in early 2012.

Marshall, chairwoman of the board, said the purpose of SB75 was "to increase investment earning of the state's Permanent School Fund monies."

Arizona's school funds program, for example, is worth $2.5 billion and is split 55.7 percent in fixed-income securities and 44.3 percent in public or private equity.

By comparison, Nevada's school fund is worth $306.8 million and is invested 100 percent in U.S. government fixed-income securities with current yields of less than 1 percent.

Mark Mathers, Nevada's senior deputy treasurer, said last year that the fund was earning about 2.5 percent.

"The earnings of this fund are very limited," Mathers said. "It's not keeping up with inflation."

In addition to helping businesses, Marshall said, the program will result in a better return for Nevada public schools.

SB75 allows nontax dollars in the Permanent School Fund to be invested in new and existing businesses. The fund's non-tax dollars add up to about $50 million, according to the state treasurer's office.

"By establishing a first of its kind fund in Nevada's history, we've created a mechanism for providing equity investment in Nevada that will help stimulate economic growth and employment, without risking tax dollars," Marshall said.

The school fund is a trust fund made up of federal funds provided to Nevada from sources such as the sale of federal lands and court fees. The fund can't be spent, only invested, with all returns going back to the school fund, meaning it "acts as an endowment fund," Mathers said.

He said SB75 defines private equity investment "as any investment in a privately held company."

Most investments will be made to build on Nevada's existing strengths, including health care and life sciences, cyber security, defense, alternative energy, manufacturing, information technology or "any other industry determined to be critical to the economic development of the state."

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893.