SB 136 — INVESTMENT IN NM FUNDS & BUSINESSES

SENATE BILL 136 54 TH LEGISLATURE- STATE OF NEW MEXICO - SECOND SESSION , 2020 INTRODUCED BY Pete Campos 6 8 10 AN ACT RELATING TO PUBLIC INVESTMENTS;

156 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 7-27-5.15 NMSA 1978 (being Laws 1990, e t 17 Chapter 126, Section 5, as amended) is amended to read:

w l n d 18 "7-27-5.15.

NEW MEXICO PRIVATE EQUITY FUNDS AND NEW = = 19 MEXICO BUSINESS INVESTMENTS.-- a l i a e r 20 A.

In addition to the investment required by a t m m 21 Subsection F of this section, no more than [nine] eleven d r e 22 percent of the market value of the severance tax permanent fund c e s k 23 may be invested in New Mexico private equity funds or New e a n b 24 Mexico businesses under this section.

u [ B.

In making investments pursuant to Subsection A .215991.3GLG of this section, the council shall make investments in New Mexico private equity funds or New Mexico businesses whose investments or enterprises enhance the economic development objectives of the state.

SB 136 Page 1 (1) "New Mexico business" means, in the case of a corporation or limited liability company, a business with its principal office and a majority of its full-time employees located in New Mexico or, in the case of a limited partnership, a business with its principal place of business and eighty percent of its assets located in New Mexico;

and (2) "New Mexico private equity fund" means an e e 17 entity that makes, manages or sources potential investments in e e n d 18 New Mexico businesses and that:

= = l ] 19 (a) has as its primary business activity a l r i 20 the investment of funds in return for equity in or debt of t e a t businesses for the purpose of providing capital for start-up, m m 21 e d r e 22 expansion, product or market development, recapitalization or c e r c 23 similar business purposes;

e a n b 24 (b) holds out the prospects for capital u [ appreciation from such investments;

.215991.3GLG - 2 - (c) has at least one full-time manager with at least three years of professional experience in assessing the growth prospects of businesses or evaluating business plans;

(d) is committed to investing or helps secure investing by others, in an amount at least equal to the total investment made by the state investment officer in that fund pursuant to this section, in businesses with a principal place of business in New Mexico and that hold SB 136 Page 2 promise for attracting additional capital from individual or institutional investors nationwide for businesses in New Mexico;

and (e) accepts investments only from accredited investors as that term is defined in Section 2 of the federal Securities Act of 1933, as amended (15 USCA Section 77(b)), and rules and regulations promulgated pursuant to that section, or federally recognized Indian tribes, nations and e e 17 pueblos with at least five million dollars ($5,000,000) in e e n d 18 overall investment assets.

= = l ] 19 E.

The state investment officer is authorized to a l r i 20 make investments in New Mexico businesses to create new job t e a t opportunities and to support new, emerging or expanding m m 21 e d r e 22 businesses in a manner consistent with the constitution of New c e r c 23 Mexico if:

e a n b 24 (1) the investments are made:

u [ (a) in conjunction with cooperative .215991.3GLG - 3 - investment agreements with parties that have demonstrated abilities and relationships in making investments in new, emerging or expanding businesses;

1) in an amount, not less than one hundred million dollars ($100,000,000), that is equal to at least ten times the SB 136 Page 3 investment from the severance tax permanent fund;

1) is established to perform technology transfer, research and development, research commercialization, manufacturing, training, marketing or public relations in any field of science or technology, including [but not limited to ] energy, security, defense, aerospace, automotives, electronics, e e 17 telecommunications, computer and information science, e e n d 18 environmental science, biomedical science, life science, = = l ] 19 physical science, materials science or nanoscience, using a l r i 20 research developed in whole or in part by a state institution t e a t of higher education or a prime contractor designated as a m m 21 e d r e 22 national laboratory by an act of congress that is operating a c e r c 23 facility in the state, or an affiliated entity;

and 2) has an e a n b 24 agreement to operate the business on state lands;

u [ (2) an investment in any one business does not .215991.3GLG - 4 - exceed ten percent of the amount available for investment pursuant to this section;

SB 136 Page 4 (a) is due to foreclosure or other action by the state investment officer pursuant to agreements with the business or other investors in that business;

In addition to the investments provided for in e e 17 Subsection A of this section, the state investment officer e e n d 18 shall make a commitment to the small business investment = = l ] 19 corporation pursuant to the Small Business Investment Act to a l r i 20 invest two percent of the market value of the severance tax t e a t permanent fund to create new job opportunities by providing m m 21 e d r e 22 capital for land, buildings or infrastructure for facilities to c e r c 23 support new or expanding businesses and to otherwise make e a n b 24 investments to create new job opportunities to support new or u [ expanding businesses in a manner consistent with the .215991.3GLG - 5 - constitution of New Mexico.

If the invested capital in the small business investment corporation equals less than two percent of the market value of the severance tax permanent fund, further commitments shall be made until the invested capital SB 136 Page 5 is equal to two percent of the market value of the fund.

Annually, a report shall be submitted to the legislature prior to the beginning of each regular legislative session and a second report no later than October 1 each year to the legislative finance committee, the revenue stabilization and tax policy committee and any other appropriate interim e e 17 committee.

Each report shall provide the amounts invested in e e n d 18 each New Mexico private equity fund, as well as information = = l ] 19 about the objectives of the funds, the companies in which each a l r i 20 private equity fund is invested and how each private equity t e a t investment enhances the economic development objectives of the m m 21 e d r e 22 state.

Each report also shall provide the amounts invested in c e r c 23 each New Mexico business." e a n b 24 SECTION 2.

EFFECTIVE DATE.--The effective date of the u [ provisions of this act is July 1, 2020.

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