Private equity investments.

WORKING DRAFT
2006
STATE OF WYOMING
06LSO-0091.E1

HOUSE BILL
NO.
HB0020

Private equity investments.

Sponsored by:
Joint Revenue Interim Committee

A BILL

for

AN ACT relating to public funds; creating the private equity investment account as specified; providing for the administration and use of the account; requiring a report; providing for rules and regulations; providing definitions; providing an appropriation; and providing for an effective date.

Be It Enacted by the Legislature of the State of Wyoming:

Section 1.
W.S. 9
‑
4
‑
714 is created to read:

9
‑
4
‑
714.

Private equity investment account.

(a)

There is created within the permanent Wyoming mineral trust fund the private equity investment account. The state treasurer may commit a maximum amount of fifty million dollars ($50,000,000.00) from the account to invest as a limited partner investor in a fund as defined by W.S. 9
‑
4
‑
711(d). Monies in the account shall not be invested in the fund until the state treasurer receives confirmation from the general partner of the fund that commitments have been obtained from other limited partner investors of not less than twenty million dollars ($20,000,000.00). The amount of the fund shall not exceed one hundred seventy-five million dollars ($175,000,000.00), and no limited partner shall invest more in the fund at any one (1) time than the amount invested by the state.

(b)

The fund shall be used to invest primarily in the buy-out of existing profitable private companies or companies that are reasonably expected to become profitable in the judgment of the general partner of the fund. The state treasurer shall negotiate the terms of the investment partnership agreement with the general partner of the fund including management fees, preferred returns and division of profits with the general partner and other partners. The agreement may provide incentives for the general partner to consider investments which enhance the economic development of this state, provided such investments offer a rate of return and safety comparable to other similar investments available to the fund.
The state treasurer shall select a general partner with substantial experience in private equity buy-out investing. The state treasurer shall only consider individuals who have sufficient, relevant and successful investment experience. The state treasurer shall only consider candidates for general partner who have not less than five (5) years of experience as a lead investor of direct investing into portfolio companies as a full-time professional investor.
The state treasurer may retain an experienced private equity consultant or management firm to advise and assist the treasurer in negotiating the investment partnership agreement.
The agreement shall require the general partner to reside and maintain an office in this state. The agreement shall be subject to final approval by the state loan and investment board.

(c)

The fund shall be managed by a general partner appointed by the state treasurer as provided by subsection (b) of this section who shall direct the fund and its investments. The fund:

(i)

Shall not be subject to the state investment policy as provided by W.S. 9
‑
4
‑
709, and shall not be included in the calculation of the state spending policy under W.S. 9
‑
4
‑
713;

(ii)

Shall be limited to the legislatively designated investment amounts as provided by W.S. 9
‑
4
‑
712;

(iii)

Shall be limited to an investment period of not to exceed seven (7) years with liquidation to occur not more than thirteen (13) years from the date of the creation of the fund, at which time the fund shall be terminated and the monies in the fund shall revert to the account created by subsection (a) of this section, and subsequently deposited into the general fund;

(iv)

Shall not be invested in more than two percent (2%) of the total committed capital in start-up or early stage companies as defined by the investment partnership agreement as provided by subsection (b) of this section, and shall not be invested in more than twenty-five percent (25%) of committed capital in any one (1) investment without the consent of a majority of the limited partners;

(v)

May be invested as the sole investor or in conjunction with and in cooperative investment agreements with parties that have demonstrated abilities and relationships in making investments similar to those the fund is authorized to make.

(d)

Any realized income from the fund shall be credited to the account created by subsection (a) of this section. The account proceeds shall be annually deposited into the general fund as provided by W.S. 9
‑
4
‑
204(u)(iii).

(e)

The general partner shall report quarterly to the state treasurer and annually, on or before December 1, to the state loan and investment board, the joint revenue interim committee and the select committee on financing and capital investments. The report shall include all pertinent information on the activity of the fund including all authorized investments and their performance.

(f)

The state treasurer may promulgate reasonable rules and regulations for the implementation and administration of the provisions of this section.

(g)

As used in this section:

(i)

"Account" means the private equity investment account created by subsection (a) of this section;

(ii)

"Fund" means a fund as defined by W.S. 9
‑
4
‑
711(d).

Section 2.

There is appropriated to the permanent Wyoming mineral trust fund for deposit into the private equity investment account created by W.S. 9
‑
4
‑
714 thirty million dollars ($30,000,000.00) from the general fund.

Section 3.

This act is effective July 1, 2006.

(END)

1
HB0020