August 1, 2012 - 1:17 pm
The Nevada Capital Investment Corp. on Wednesday unanimously approved a contract with Hamilton Lane, a private equity fund-to-funds manager, to run its $50 million Silver State Opportunity Fund LLC.
Hamilton Lane will be responsible for developing an investment plan and selecting private equity funds and venture capital that will invest in Nevada.
“From what we’ve seen, we are very optimistic that they can produce real returns that benefit Nevada businesses and schoolchildren,” said David Goldwater, an NCIC board member and owner of David Goldwater Consulting in Las Vegas.
The Silver State Opportunity Fund invests capital from the $310 million Nevada Permanent School Fund, which consists of nontax dollars.
The fund’s purpose is to increase the school fund’s investment earnings, state Treasurer Kate Marshall has said. Nevada’s school fund is invested 100 percent in U.S. government fixed-income securities with current yields of less than 1 percent.
The new fund plans to invest in technology, manufacturing, biotechnology and other industries located here or interested in moving to Nevada. Hamilton Lane is responsible for ensuring that 70 percent of private equity investments in existing businesses are Nevada-based.
Senate Bill 75, which created the fund and was approved by the Legislature in 2011, requires that 100 percent of venture capital investments in startup businesses be made in Nevada.
David Helgerson, managing director of Hamilton Lane, assured board members that his firm plans to invest all funds in Nevada. Helgerson said the company is looking forward to “moving into business as soon as we can.”
Miguel Luina, an analyst with Hamilton Lane in San Francisco, will oversee Nevada’s investment fund. The Philadelphia-based private equity investment management firm has almost $23 billion in discretionary assets under management and oversight of another $135 billion in advisory assets.
The contract will be considered by the state Board of Examiners at its Aug. 14 meeting.
The seven-member NCIC board of directors spent two hours Wednesday considering specifics of the 10-year contract. Among the issues considered were the source of money to operate the fund and what recourse NCIC will have if Hamilton Lane is not in compliance with the 70 percent rule.
Mark Mathers, chief deputy state treasurer, said Hamilton Lane’s fees will be paid out of earnings or principal, depending on how the fund performs. The firm will have a series of networking events over the next six to nine months to introduce the fund to business and investors.
The board agreed that Hamilton Lane’s contract could be voided if it is chronically out of compliance with the 70 percent rule.
Helgerson said he “feels confident that we can deliver on the 70 percent level.” He told the board that returns were “first and foremost,” but if they think an investment doesn’t fit the mandate, “we’ll have a conversation.”
Marshall agreed, saying that in creating the investment fund, “we are trying to do something that hasn’t been done in this state before. … We are trying to build an ecosystem.”
Contact reporter Chris Sieroty at csieroty@review
journal.com or 702-477-3893.