by Andrés Ramos, Content Marketing Specialist – eVestment Private Markets
Investing in the Peace Garden State
On March 26, 2021, Callan met with their client North Dakota State Investment Board (SIB) to discuss the results of their In-State Private Markets Program manager search. The document covered in the meeting was among the most viewed in April by Market Lens users.
North Dakota is one of the most under-funded states in the country when it comes to private equity and venture investment. According to NVCA, in 2019 North Dakotan companies saw only seven venture capital deals totaling $21.2 million. Between 2013 and 2018, private equity firms invested a meager $6.2 billion in North Dakota. That total is about half the amount that managers invested in North Dakota neighbor, Minnesota in 2019 alone ($12 billion).
The In-State Private Markets Program from North Dakota SIB seeks to address this shortfall by awarding a mandate to a fund manager who presents a compelling proposal for an investment program focused on companies and entrepreneurs the state.
Programs like these are becoming more common across North America as state and provincial pension plans seek to diversify capital away from heavily trafficked markets like California, Texas, Massachusetts, and New York and spur private capital investments in local businesses and economies. By investing in local jurisdictions that will benefit pension plan beneficiaries in the form of long-term investment returns, the programs are making double the impact in their home states and provinces.
Wheels in motion
In February 2021, Callan issued a questionnaire to solicit proposals for this mandate and the review document discusses the outcome of that process. Of the eight fund managers who the questionnaire was presented to, four responded and three advanced to the consideration stage: 50 South, GCM Grosvenor, and Sun Mountain. In the review on March 26, 2021, Callan outlines the key merits and considerations for each of the three before recommending two for final consideration.
Callan favored the fund managers who emphasized the development of investment programs with wide ranging impacts or investment goals. One fund manager focused their pitch around developing an incubator program in addition to making later stage venture investments. Another highlighted their experience with sponsors having varied investment objectives, from economic development to innovation and returns-driven.
Among the key considerations mentioned were a lack of commitment to local presence in North Dakota, a narrow strategy focus, and mixed-results or limited track records with in-state investment programs.
Gaining an edge
Access to documents like these are clear and direct checklists of an investor’s needs when it comes to winning a mandate. After reviewing and analyzing a document like this one, a fund manager seeking an allocation from North Dakota SIB for future vintages of their in-state investment program will be able to speak directly to how their proposal would meet the needs of the pension plan. Additionally, the program review offers insight into how Callan conducts manager searches for in-state programs generally and is a guide for what they could reasonably expect from a search run by the consultant for a different state pension program.
LP specific intelligence like this is a central benefit to eVestment’s Market Lens platform and can give fund managers the insights they need to perfectly tailor their RFPs, ace pitch presentations, and win new mandates.