Silver State Opportunities invests in mezzanine fund

A state investment fund designed to boost education’s coffers has made its second investment.

The Silver State Opportunities Fund has invested $5 million in Huntington Capital Fund III, a mezzanine fund, a type of private equity fund that makes higher-risk, higher-return investments in smaller companies.

The Huntington fund recently finished its first closing with a handful of other investors, according to Mark Mathers, chief deputy treasurer for Nevada. He expects it to reach about $50 million and begin investing soon. It’s the third fund raised by San Diego, Calif.-based Huntington Capital, which plans to open an office in Nevada in the next six months.

The new fund will invest in a variety of businesses located in Nevada or looking to relocate here as well as companies throughout the southwest.

“They’re industry-agnostic as is our program as a whole,” says Mathers.

The Silver State Opportunities Fund is overseen by the Nevada Capital Investment Corp., which was established by Senate Bill 75, sponsored by the treasurer’s office and passed by the 2011 Nevada Legislature. The fund has up to $50 million to invest and is funded through the State Permanent School Fund, a fund that derives its money from state fees and other non-tax income. The goal of Silver State Opportunities Fund is to earn additional income to finance the state’s education system.

In August 2012, NCIC’s board of directors chose Hamilton Lane, a global funds manager to invest Silver State Opportunities Fund in both individual companies and funds such as the Huntington fund. Its first commitment was a $2 million investment in Miller Heiman Inc., a corporate sales training firm in Reno.

By law, 70 percent of the Silver State Opportunities Fund investments must be made in Nevada-based companies or businesses planning to relocate to the state.

Mathers says NCIC and Hamilton Lane agree on the strategy of building a diverse portfolio, from venture capital for start-ups to mezzanine funds like Huntington to buyout funds that take public companies private, as well as direct investments, all in a range of industries.

Hamilton Lane is continuing to evaluate other companies and private equity funds and should be rolling out additional investments in the next 90 days, says Mathers.

“We think we’ll probably have another fund investment soon,” says Miguel Luiña, vice president, Hamilton Lane. “We don’t have anything imminent in private companies but if interesting opportunities arise we can move pretty quickly.”