FREQUENTLY ASKED QUESTIONS
Frequently Asked Questions:
Michigan 21st Century Investment Fund, LP
1. What is the Michigan 21st Century Investment Fund, LP?
The Michigan 21st Century Investment Fund, L.P. (the "21st Century Fund" or "Program") has been created, as per the provisions of the Public Act 225 of 2005 (or the "21st Century Fund Act"), through an agreement between Credit Suisse and the Michigan Strategic Fund. It seeks to strengthen and diversify Michigan's economic base by fostering the creation and growth of new jobs, new businesses, and new industries within the State through investments in private equity, venture capital and mezzanine funds, as well as potential co-investments alongside these funds. The Program will initially be capitalized with $120.0 million of total commitments, including $6.0 million from Credit Suisse.
The Michigan 21st Century Investment Fund, L.P. is part of the overall 21st Century Jobs Fund initiative that was first announced in Nov '05 by Governor Granholm. Under this 10-year initiative, the State government decided to allocate up to $1.0 billion of proceeds from Tobacco Settlement monies to strengthen and diversify Michigan's economic base by focusing resources in three areas. Up to 40% ($400 million) of the amount allocated to the 21st Century Jobs Fund may be invested through the Capital Investment Program over the life of the 10-year initiative of which the Michigan 21st Century Investment Fund, L.P. is a part. The three components of the 21st Century Jobs Fund include:
- A Capital Investment Program that seeks to make investments in qualified private equity, mezzanine and venture capital funds as well as potential co-investments alongside these funds
- A Competitive-Edge Commercialization Program that seeks to invest in the commercialization of products, processes and services as well as basic and applied research
- A Commercial Lending Program, which seeks to stimulate additional lending by financial institutions across the state by creating commercial loan enhancement programs
Credit Suisse, through its Customized Fund Investment Group ("CFIG"), is only involved in the Capital Investment Program through the aforementioned Michigan 21st Century Investment Fund, L.P.
2. What are the investment objectives of the Program?
The investment objectives of the Program include the following:
- Target a superior internal rate of return on private equity, mezzanine and venture capital investments while contributing to economic diversification and job creation in the State of Michigan;
- Strengthen and diversify Michigan’s economic base by investing in Michigan and fostering the creation and growth of new jobs, new businesses, and new industries within the State;
- Promote the retention of businesses and jobs through investing in Michigan-based businesses;
- Encourage the development and commercialization of competitive edge technologies by supporting Michigan-based businesses;
- Help facilitate the transfer of technologies from the State of Michigan’s various universities and research institutions to the private sector;
- Seek to attract investments from both regional and national private equity, mezzanine and venture capital funds
3. How much capital is available for investment under 21st Century Investment Fund?
Initially, approximately $109 million will be available for fund investments and co-investments.
4. Has Credit Suisse made a capital commitment to the Program?
Yes, Credit Suisse has made a capital commitment of $6.0 million to the Program.
5. What are the basic investment guidelines for the Program?
Some of the basic investment guidelines that the Program would strive to achieve include:
- Local, regional and national fund managers
- First-time and established fund managers
- Qualified venture capital, private equity and mezzanine funds
- Potential co-investments alongside the Qualified Funds
- Diverse industry / sector exposure, including “competitive edge technologies”, i.e. Life sciences, Advanced automotive, manufacturing and materials, homeland security and defense technology, and alternative energy technology.
6. What are some of the investment restrictions associated with the Program?
Some examples of investment restrictions include the following:
- Capital is not used to invest in funds whose strategies provide for the break up or liquidation of businesses;
- Capital is not used for development of stadiums or arenas for use by professional sports teams or for the development of casinos and related properties;
- Capital is not provided to a business enterprise that induces qualified businesses or small businesses to leave the state.
7. How long would the Program take to invest capital?
The Program intends to make investments in private equity, venture capital and mezzanine funds as well as co-investments over a period of approximately three years from the Program’s closing.
8. How many fund managers would the Program invest in? How many co-investments would the Program make?
The Program expects to make commitments to 10-12 fund managers and invest in 7-10 co-investments.
9. What process would the 21st Century Fund follow for evaluating fund managers?
The key steps involved in the fund manager evaluation process include:
- Issue a Request for Proposal (RFP)
- Review and shortlist of RFP responses
- Request for completing the detailed questionnaire
- Review of detailed questionnaire / on-site meetings
- Final selection
The complete fund manager evaluation process (steps ‘a’ through ‘e’) could take up to 6-8 weeks from the date of receipt of initial responses to the RFP.
10. How should the response to RFPs be submitted? What is the deadline?
Bidders should submit their proposals by both email and hard copy. Please send electronic copies including all word and excel files to jessica.holsey@credit-suisse.com. Two hard copies should be sent to the following address:
Sean Barrette, Analyst
Credit Suisse
11 Madison Avenue, 16th Floor
New York, NY 10010
Any questions regarding the specifications in the RFP should be sent via email to: jessica.holsey@credit-suisse.com. Proposals must be received via email and hard copy on or before 5pm (EST) on November 17, 2006.
If a fund manager is not currently raising capital, it could still respond to the RFP since the Program expects to make commitments to funds over a period of up to three years. Respondents should provide any materials they currently have and indicate in an accompanying letter the status of their investment / fundraising timeline. The Program will also be seeking future submissions at later dates over the next three years. For further information on submission of RFPs, please refer to the following webpage:
http://www.michigan21stcenturyinvestmentfund.com/fundmanagers.htm
11. Will submissions be evaluated as soon as they are received?
Yes, the 21st Century Fund expects to begin its analysis as soon as it receives submissions.
12. If I’m an entrepreneur seeking to raise capital, whom should I contact?
Please contact Credit Suisse’s Michigan office and we will make introductions to potential fund managers that might be able to assist you.
13. Who is the primary contact person for this Program?
Robert D. Payne III
Credit Suisse
Alternative Investments
Customized Fund Investment Group
2000 Town Center, Suite 1900
Southfield, Michigan 48075
Office: 248-945-7373
Fax: 248-351-2699
E-mail: bob.payne@credit-suisse.com
Descriptions in this FAQ sheet with respect to the 21st Century Fund’s strategy and investment processes were designed as general summaries and were not intended to be and should not be relied upon as a comprehensive description of the Program’s policies. For further details of the Program’s strategy and processes, please contact the designated contact person in Credit Suisse’s Michigan office.
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