Wyoming votes to invest $600M in private equity

CHEYENNE, Wyo. (AP) -- Wyoming's top elected officials voted Monday to increase the state's investment in private equities.

The state's Loan and Investment Board, which includes Gov. Matt Mead and the other four statewide elected officials, voted unanimously to invest up to $600 million over the next three to five years in investments that aren't traded on the stock markets. The state has more than $16 billion in its total portfolio.

The board accepted a recommendation from state Treasurer Mark Gordon to hire firms Hamilton Lane of Philadelphia and Neuberger Berman of Dallas to invest up to $200 million each of state funds in private equity.

The state has been reviewing private equity proposals from investment firms for the past two years. Gordon took office last fall after the death of longtime Wyoming Treasurer Joe Meyer.

The board went agreed with Mead's suggestion to put up another $200 million for private equity investment above the $400 million required to hire the two firms. Gordon's office will work with the state's principal financial adviser, R.V. Kuhns and Associates, to pick another firm to handle the additional money.

Bob Grady, a principal in Cheyenne Capital Fund, said after the meeting that his firm plans to bid to manage the remaining $200 million.

Cheyenne Capital contracted with Wyoming in 2003 to invest state funds in private equity. Since then, the firm has invested nearly $350 million for the state and Grady said that the firm's returns to the state have outperformed the S&P 500, the largest companies on the stock market, by over 8 percent a year.

Cheyenne Capital will stop making new investments for the state this year and Grady said it will likely take years for the firm to wrap up the investments it already has made.

Joshua R. Kevan, a senior consultant with R.V. Kuhns, said he believes it's prudent for Wyoming to increase its rate of investment in private equity. He said the state and his firm have been studying the matter for years.

"This will not be $600 million that's invested tomorrow in private equity," Kevan said. "It will be new commitments to private equity that will be made essentially over the next five years."

Michael Walden-Newman, Wyoming's chief investment officer, suggested spreading the private equity investments around to other funds in the state's portfolio. The investments in Cheyenne Capital Fund have been made only from money in the states' Permanent Mineral Trust Fund and Permanent Land Fund.

The board agreed with Walden-Newman's suggestion to draw money for private equity investments from state funds that benefit educational programs and a fund that holds money from worker's compensation payments.