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April 7, 2009

 

$528 Million Available for NYS Companies Through
Pension Fund In-State Program

DiNapoli to Start Statewide Tour to Identify Sound NYS Investments

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State Comptroller Thomas P. DiNapoli today announced a series of regional meetings to help identify potential investments for more than a half-billion dollars available through the New York State Common Retirement Fund’s In-State Private Equity Investment Program. DiNapoli said the In-State Fund has $528 million remaining from the $931 million committed to the program.

“The In-State Program has a great double bottom line,” DiNapoli said. “First and foremost, we’re generating solid returns for the pension fund. But these investments also help foster the next generation of great New York state companies. We have a half-billon dollars we want to invest in innovative, cutting-edge technology that’s being developed by the best minds in New York.

“In today’s economic environment, the temptation for some investors may be to run and hide. But now is not the time to be timid. I have a fiduciary obligation to find sound investments that will provide strong returns. The In-State program has already helped us find some of those investments right here in New York. We’ll be traveling the state looking for more in-state investments that will give us a great return on investment and also help New York’s economy.”

DiNapoli released a report today that found the In-State Program leveraged more than $3 billion of additional investment, helped create thousand of jobs, and achieved a 30 percent rate of return on exited investments.

DiNapoli’s report notes to date the Fund has exited 27 companies and achieved an internal rate of return of more than 30 percent, returning $134.1 million to the Fund on $74.9 million invested. In addition, the In-State Private Equity Program achieved a full return on all of its portfolio investments in Summer Street Capital, generating a gross total cash-on-cash return on investment of 3.5 times the Fund’s investment and an internal rate of return of 55 percent per annum. Summer Street Capital Partners generated above top-quartile industry performance for the Fund.

“State Comptroller DiNapoli is committed to expanding the In-State Program and to helping develop New York-based companies,” said Bill Mulrow, managing director of Paladin Capital Group. "The Common Retirement Fund’s in-state investments enable innovative private equity investors, like Paladin Capital Group, to establish a firm foothold in New York and ensures the state is home to groundbreaking research and technology. This is a great partnership and great program.”
“We have benefited from the incredible investment opportunities within New York state and with the capital, support and prestige of the Common Retirement Fund, Summer Street was successful in providing the capital necessary to grow and expand New York’s small businesses,” said Brian D'Amico at Summer Street Capital.

“We believe in the innovation and growth prospects emerging from New York,” said Mike Arpey, managing director and co-head of Credit Suisse’s Customized Fund Investment Group. “This road show continues the precedent set by the New York State Common Retirement Fund to serve an important role in the community and develop the talent that lies in the state. We continue to pursue New York investments on behalf of the New York state pension fund and look forward to partnering with the Fund on future opportunities that emerge from this road show and these new initiatives.”

DiNapoli’s report also notes the Fund’s commitment to the Program has grown to $931 million, and the actual investment in New York companies more than doubled to $403.6 million in March 2009 from $195.7 million in December 2006. In addition, since the Program’s inception in 1999, the Fund’s investments have leveraged $3 billion in additional investments from other sources.

DiNapoli is holding the meetings and participating in events to inform New York entrepreneurs and businesses about the opportunities available through the In-State Program. The first In-State Private Equity presentation will be held in New York City on April 14. Additional events are scheduled to be held in: Ithaca on April 16, Syracuse on April 17, Long Island on April 24, Albany on May 20, Rochester on June 2, Buffalo on June 25 and Potsdam on September 8.

DiNapoli’s report also provides an overview of the Program’s progress since it began in 1999:

  • 43 companies were added to the roster of In-State Private Equity Program investments raising the total to 127 companies in March 2009 from 84 in December 2006;
  • The number of employees at the companies the Fund invested in increased from approximately 8,818 employees at the time of initial investment to an estimated 11,470 as of March 2009 or when the Fund exited the investment;
  • The Fund invested the majority of capital, 55 percent, in companies located north of the New York City suburbs, 9 percent in suburban New York City and 36 percent within the City; and
  • Seven companies relocated to New York state as a direct result of the Fund’s capital investment. These companies are Tri-Ed Distribution from Canada, IGA Worldwide from Europe, Smartpill from California, Aequus Technologies and Versamed both from New Jersey, GX Studios from Connecticut, and Associated Content which consolidated from several out-of-state locations.

Through its In-State Private Equity Program, the Fund invests with private equity managers who seek to invest in New York state companies that require capital for growth. The program, created in 1999 with the support of the state Legislature, targets investment of state funds in the New York state economy. The program is designed to provide investment returns consistent with the risk of private equity while also expanding the availability of capital for New York businesses. The program also helps generate jobs and private sector investment in the state.

About the Common Retirement Fund
The New York State Common Retirement Fund is the third largest public pension plan in the United States with more than one million members, retirees and beneficiaries from state and local governments. Comptroller DiNapoli is the sole trustee of the Fund and manages a diversified portfolio of public and private equities, fixed income, real estate and alternative instruments.

Click here to view the report.

Click here for mp3 audio.

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