HF 3061

as introduced - 83rd Legislature (2003 - 2004) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to the State Board of Investment; authorizing 
  1.3             increased State Board of Investment participation in 
  1.4             venture capital investments; classifying data related 
  1.5             to certain venture capital investments; appropriating 
  1.6             money in the event of certain venture capital 
  1.7             investment shortfalls; amending Minnesota Statutes 
  1.8             2002, sections 11A.24, subdivision 6, by adding a 
  1.9             subdivision; 13.635, by adding a subdivision. 
  1.10  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.11     Section 1.  Minnesota Statutes 2002, section 11A.24, 
  1.12  subdivision 6, is amended to read: 
  1.13     Subd. 6.  [OTHER INVESTMENTS.] (a) In addition to the 
  1.14  investments authorized in subdivisions 1 to 5, and subject to 
  1.15  the provisions in paragraph (b), the state board may invest 
  1.16  funds in:  
  1.17     (1) venture capital investment businesses through 
  1.18  participation in limited partnerships, trusts, private 
  1.19  placements, limited liability corporations, limited liability 
  1.20  companies, limited liability partnerships, and corporations; 
  1.21     (2) real estate ownership interests or loans secured by 
  1.22  mortgages or deeds of trust or shares of real estate investment 
  1.23  trusts through investment in limited partnerships, bank 
  1.24  sponsored collective funds, trusts, mortgage participation 
  1.25  agreements, and insurance company commingled accounts, including 
  1.26  separate accounts; 
  1.27     (3) regional and mutual funds through bank sponsored 
  2.1   collective funds and open-end investment companies registered 
  2.2   under the Federal Investment Company Act of 1940, and closed-end 
  2.3   mutual funds listed on an exchange regulated by a governmental 
  2.4   agency; 
  2.5      (4) resource investments through limited partnerships, 
  2.6   trusts, private placements, limited liability corporations, 
  2.7   limited liability companies, limited liability partnerships, and 
  2.8   corporations; and 
  2.9      (5) international securities. 
  2.10     (b) The investments authorized in paragraph (a) must 
  2.11  conform to the following provisions:  
  2.12     (1) the aggregate value of all investments made according 
  2.13  to paragraph (a), clauses (1) to (4), may not exceed 35 percent 
  2.14  of the market value of the fund for which the state board is 
  2.15  investing; 
  2.16     (2) there must be at least four unrelated owners of the 
  2.17  investment other than the state board for investments made under 
  2.18  paragraph (a), clause (1), (2), (3), or (4); 
  2.19     (3) except as provided in subdivision 8, state board 
  2.20  participation in an investment vehicle is limited to 20 percent 
  2.21  thereof for investments made under paragraph (a), clause (1), 
  2.22  (2), (3), or (4); and 
  2.23     (4) state board participation in a limited partnership does 
  2.24  not include a general partnership interest or other interest 
  2.25  involving general liability.  The state board may not engage in 
  2.26  any activity as a limited partner which creates general 
  2.27  liability.  
  2.28     (c) The following data received, prepared, used, or 
  2.29  retained by the state board in connection with investments 
  2.30  authorized by paragraph (a) is public: 
  2.31     (1) the name of the legal entity in which the state board 
  2.32  has invested or in which the state board has considered an 
  2.33  investment; 
  2.34     (2) the state board commitment amount, if any; 
  2.35     (3) the funded amount of the state board's commitment to 
  2.36  date, if any; 
  3.1      (4) the market value of the investment by the state board; 
  3.2      (5) the state board's internal rate of return; and 
  3.3      (6) the age of the investment in years.  
  3.4      All other financial or proprietary data received, prepared, 
  3.5   used, or retained by the state board in connection with these 
  3.6   investments or in which the state board has considered an 
  3.7   investment that is considered nonpublic by the legal entity or 
  3.8   portfolio companies or other entities providing the data is 
  3.9   protected nonpublic data under section 13.02, subdivision 9.  As 
  3.10  used in this section, "financial or proprietary information" 
  3.11  means information that has not been publicly disseminated or 
  3.12  that is unavailable from other sources, the release of which 
  3.13  might cause competitive harm to the state board or to the legal 
  3.14  entity or to a portfolio company in which the legal entity holds 
  3.15  an interest. 
  3.16     Sec. 2.  Minnesota Statutes 2002, section 11A.24, is 
  3.17  amended by adding a subdivision to read: 
  3.18     Subd. 8.  [MINNESOTA EARLY STAGE VENTURE CAPITAL 
  3.19  INVESTMENTS.] (a) For purposes of this subdivision, "Minnesota 
  3.20  early stage company" means an early stage company with its 
  3.21  headquarters and principal place of business located in this 
  3.22  state. 
  3.23     (b) Notwithstanding the limits in subdivision 6, paragraph 
  3.24  (b), clause (3), and until June 30, 2019, the state board may 
  3.25  invest in early stage venture capital investments, subject to 
  3.26  the following conditions: 
  3.27     (1) the state board may not make initial investments of 
  3.28  more than a total of $200,000,000 under this subdivision, and no 
  3.29  more than 65 percent of the amount invested may be committed to 
  3.30  bioscience investments; 
  3.31     (2) each separate investment vehicle must commit 50 percent 
  3.32  or more of its assets to investments in Minnesota early stage 
  3.33  companies; 
  3.34     (3) the state board investment may not exceed 50 percent of 
  3.35  the total investment in an investment vehicle; 
  3.36     (4) no new investment vehicles may be purchased after June 
  4.1   30, 2007; and 
  4.2      (5) the state board may reinvest returns from investments 
  4.3   made under this subdivision. 
  4.4      The state board may set different evaluation criteria for 
  4.5   investment vehicles and fund managers of investments under this 
  4.6   subdivision than it uses for other investments. 
  4.7      (c) For the purposes of this paragraph, "minimum rate of 
  4.8   return" is the lesser of either: 
  4.9      (1) an 8.5 percent annual rate of return; or 
  4.10     (2) the annual rate of return for the applicable time 
  4.11  period for all venture capital investments made under 
  4.12  subdivision 6, paragraph (a), clause (1). 
  4.13  By July 30, 2019, the state board must determine the annual rate 
  4.14  of return on the aggregate total of all Minnesota early stage 
  4.15  venture capital investments made under subdivision 6, paragraph 
  4.16  (c), between July 1, 2004, and July 1, 2019, and compare that 
  4.17  rate of return with the minimum rate of return, as applied to 
  4.18  the initial investments, up to a limit of $200,000,000, made in 
  4.19  Minnesota early stage venture capital investment vehicles.  If 
  4.20  there is a deficiency in comparison to the minimum rate of 
  4.21  return, the board must notify the commissioner of finance of the 
  4.22  amount necessary to provide the minimum rate of return for 
  4.23  initial investments, up to a limit of $200,000,000, in Minnesota 
  4.24  early stage venture capital investment vehicles made under 
  4.25  subdivision 6, paragraph (c), between July 1, 2004, and July 1, 
  4.26  2019.  The amount necessary is appropriated from the general 
  4.27  fund to the state board for distribution in the same manner 
  4.28  provided for the investment proceeds from investments under 
  4.29  subdivision 6, paragraph (c). 
  4.30     (d) This subdivision expires August 1, 2019. 
  4.31     Sec. 3.  Minnesota Statutes 2002, section 13.635, is 
  4.32  amended by adding a subdivision to read: 
  4.33     Subd. 1a.  [STATE BOARD OF INVESTMENT.] Certain government 
  4.34  data of the State Board of Investment related to venture capital 
  4.35  investments are classified under section 11A.24, subdivision 6. 
  4.36     Sec. 4.  [EFFECTIVE DATE.] 
  5.1      This act is effective July 1, 2004.