Investment fund selects Michigan as first regional target

August 2, 2011
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Long on talent but short on cash, Michigan is the country’s first beneficiary of a new type of regionally targeted impact investment program designed to stimulate business activity and the economy.

Representatives from the U.S. Small Business Administration, The Dow Chemical Co. and Credit Suisse, as well as Gov. Rick Snyder and Treasurer Andy Dillon, announced a multi-fronted program last week that could pump as much as $130 million into growth and development of smaller and mid-sized businesses.

The debt and equity funding initiative is called the InvestMichigan! Mezzanine Fund.

Karen Mills, administrator for the U.S. SBA, said the agency’s contribution is part of the Start Up America program it launched with a $1 billion pledge in January. Approximately $80 million of that fund will be aimed at qualifying Michigan businesses.

“Why Michigan? In Michigan, the need is there. Ninety percent of counties qualify for economic assistance. It has the highest number of engineers per capita of any state, as well as excellent universities and lots of entrepreneurs,” Mills said.

Andrew Liveris, chairman and CEO of Dow, which is contributing $15 million to the fund, said he hopes the money is used to further invest in Michigan and create new jobs. “It’s very important that we show action, not just talk,” he said. “Reviving this sector, reviving manufacturing, is key …”

The fund is not limited to manufacturers, however. In fact, Kelly Williams, managing director and head of Credit Suisse’s Customized Fund Investment Group, said the first recipient will be revealed in about a month, and that it’s a Michigan-based food processor.

“This is not exclusively for manufacturing, but given Michigan’s skill set, it will probably predominately be there,” she said, adding that Credit Suisse will be providing approximately $15 million in mezzanine capital to companies over the next three to four years.

The state of Michigan also is contributing $30 million to the venture through the state’s pension funds.

“This innovative program is a fine example of how public and private sector resources can cultivate growth in the business community while generating competitive market rates of return for the state’s pension funds,” said Gov. Snyder. “I’m just looking forward to this working well. We’re going to continue the reinvention process in our state.”

Stated goals for the program include:

  • Achieving superior investment returns.

  • Strengthening and diversifying Michigan’s economic base by fostering the creation and retention of companies and industries within the state.

  • Enhancing Michigan’s reputation for entrepreneurship and further developing the state’s entrepreneurial ecosystem.

  • Attracting additional investments from both regional and national private equity and mezzanine funds.

  • Encouraging public and private partnerships within the state.

The fund will be a licensed Small Business Investment Company formed by Credit Suisse’s investment group and Beringea LLC, a Farmington Hills-based venture and expansion-stage capital investor with more than 70 portfolio companies in the United States and Great Britain.

Companies that are headquartered in Michigan, have a significant presence in Michigan, or are in the process of planning an expansion in or relocation to Michigan would be candidates for the funding. More information about applying for the program is available at www.investmichiganfund.com

“Michigan provides an extraordinary environment for investment, given its centers of excellence in technology and innovation and highly skilled work force,” Dillon said. “We look forward to the positive returns this will generate for the State of Michigan Retirement System and the impact this program will have on Michigan’s economy.”

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