CHEYENNE — The five elected state officials will vote Monday on whether to increase Wyoming’s investments in private equity funds.
The officials, sitting as the State Loan and Investment Board, will consider a recommendation to commit to private equity investments for 4 percent of the state’s permanent funds, or $500 million during a three-to-five-year period.
The recommendation came from the state’s financial advisers, R. V. Kuhns and Associates.
The advisers also recommended the board hire two firms and split the $500 million between them. The firms are Hamilton Lane of Philadelphia and Neuberger Berman of Dallas. The firms were chosen from among 19 managers who originally responded to the state’s request for proposal.
The advisers said the new fund would allow the state to own a diversified private equity portfolio.
Gov. Matt Mead called a
special meeting of the board for Monday because he believed the importance of the issue and discussion required all five members be present, according to Mead spokesman Renny Mackay.
State Treasurer Mark Gordon recommends the board officials adopt all of the financial adviser’s recommendations.
He said the new fund was the remaining item of work on investments undertaken by his predecessor, the late State Treasurer Joe Meyer. Meyer died in October.
The state currently has investments with two private equity companies: Cheyenne Capital, which has offices in Jackson and Denver, and Access Venture, a specialized venture capital fund in Denver.
Cheyenne Capital has a commitment from the state for $250 million in private equity investments. Access Venture has $10 million in state commitments.
The new commitment would establish another private equity fund for
Cheyenne Capital wasn’t considered for the new program because it couldn’t meet the required $2 billion in assets under management, which was a minimum requirement.
The directors of Cheyenne Capital—John Fitzgerald, the founder, and Robert Grady—were in Cheyenne earlier this week visiting with the SLIB members to see if they could create a second Cheyenne Capital fund.
Fitzgerald and Grady said they will attend Monday’s board meeting.
The two pointed out that Cheyenne Capital is the only private equity firm with head offices in Wyoming. Fitzgerald and Grady say there is no correlation between fund size and performance.
“Bigger is not necessarily better,” Grady said. “We would say we would like to be considered because we believe our returns are superior.”
As of March 31, Cheyenne Capital had invested $348 million for the state and had returned $250 million, the directors said in a fact sheet prepared for
The company still has investments in 26 private equity funds and 30 companies worth another $241 million.
Cheyenne Capital has produced $91 million in profits since 2004, according to the state treasurer’s office.
If Cheyenne Capital doesn’t get the new fund or part of it, the company can’t make any new investments on behalf of the state after Sept. 1, 2013, when the company’s investment period ends.
“That is key in the private equity business, to make new investments,” Fitzgerald said.
The company will, though, continue to monitor and manage the existing investments for the state regardless, he said.
The state has a $16 billion portfolio, excluding retirement funds.
The 4 percent target for private equity investments affects all of the permanent funds except those barred from owning stocks.
The Permanent Mineral Trust Fund is the state’s largest permanent fund with $6 billion.