Program makes first capital investment
January 29, 2013
The Nevada Capital Investment Corporation made its first investment in a Nevada company Monday.
The corporation was created during the 2011 Legislature at the urging of State Treasurer Kate Marshall. Senate Bill 75 allows up to $50 million in funding from the Permanent School Fund to be invested to help corporations either locate in Nevada or expand existing Nevada operations.
The goal is to help the state’s economy. Marshall emphasized that it isn’t a tax break or a loan, but an investment. She said the school fund gets $2 million in stock for its investment in Miller Heiman, Inc., a global company headquartered in Reno for some 30 years.
Marshall said while the school fund put $2 million into the company, Providence Equity Partners is putting in much more to help the company expand operations.
“This is both a wise investment in terms of the potential return on our investment and one that will have the ancillary benefit of helping to grow our local economy,” Marshall said.
She said not only does the investment benefit the Permanent School Fund, it leverages more capital to come to Nevada from, in this case, Providence Equity.
One of the problems Nevada businesses have had in trying to fund growth is the lack of capital available in the state.
To manage all that and make the process work, Marshall said, the investments will be managed by the national private equity firm Hamilton Lane.
Over the course of the next few years, she said, those investments will generate profits to the school fund and, when the state sells the company’s stock, the $2 million plus any added value will be returned to the school fund so it can be reinvested.
There is some $320 million in the Permanent School Fund, which, under Nevada’s constitution, can only be invested to provide funding to the state’s K-12 school system. The body of the fund, which was created by selling federal lands turned over to the state, can’t be spent. Only the income generated by the body of the fund can be used.
Marshall said this is just the first investment. She said Hamilton Lane will make a number of other investments in businesses to benefit not only the state’s schools but the state’s economy.