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DiNapoli Touts NY Pension's Private Equity Fund

11:09 PM, Sep 17, 2013   |    comments
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By Joseph Spector,  Albany Bureau Chief

ALBANY The state's pension fund is boosting its investment in New York-based companies, making nearly $400 million available to help job creation, Comptroller Thomas DiNapoli said Tuesday.

The state is investing about $1.1 billion from the state's massive $160 billion pension fund into start-up companies and private equity firms, DiNapoli said. Nearly $700 million has already been put into 252 companies.

"The In-State Private Equity Program has proven to be a win for the state's economy and for the state pension fund. For every dollar invested in exited companies, we've made $1.60," DiNapoli said in a statement.

The pension fund, one of the largest in the country, covers 1 million retirees and current public employees in state and local governments.

The fund seeks an annual return of 7.5 percent, and how the fund performs impacts how much local governments pay for retirement costs. The expense has soared in recent years because of the struggles on Wall Street.

But DiNapoli said the in-state program has had success, and his office has established partnerships with 18 private equity managers. Over the past five years, he said the fund has earned a 20 percent rate of return on investments that cashed out the equity they received from the state.

He said the program has also helped create or retain nearly 4,000 jobs across New York, leveraging $6.7 billion in capital.

DiNapoli, who is up for re-election next year, is touring the state to tout the investments. He was in Rochester on Monday, saying $81.2 million has been invested in 21 companies in the Finger Lakes region.

E.J. McMahon, president of the fiscally conservative Empire Center for New York State Policy, questioned DiNapoli's in-state investments, charging that it's a "political use of the pension fund."

He said the comptroller shouldn't be using the fund to curry favor with in-state companies and garner headlines.

"I think the pension fund should be making prudent investments in general and not targeting them to any particular state," McMahon said. "They should making good investments wherever they are."

DiNapoli and previous comptrollers have said that a limited amount of investment in New York companies is good for the fund and the state's economy.

The fund has invested in 85 companies in upstate and in the New York City suburbs, totaling more than $400 million. The rest was in New York City.

The fund's private equity investments included 17 companies in the Hudson Valley totaling $70 million. It also included six Southern Tier companies totaling $23 million.

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