Montana Capital Investment Board Launches New Website and News of Pending RFP for a Fund Manager

After several years of legislation and discussion and a Herculean effort by the Board of Directors, the Montana Capital Investment Board has a new website http://www.mtcib.com (The site is still in development so there may be information that is simply a place holder until current info can be added) and pending RFP to develop a Fund of Funds in Montana.

If you are interested in finding out more information about the Montana Capital Investment Board: http://www.mtcib.com/RegisteredMembers/MemberSignUp.aspx

The purpose of the Montana Capital Investment Act is to benefit the State of Montana by attracting out-of-state venture investment funds interested in providing equity capital and near-equity capital to Montana businesses, to nourish a private seed and venture capital industry in Montana and to encourage lead local investors, all to strengthen the State’s economy and build a significant, permanent capital resource to serve the needs of Montana businesses.

To achieve this purpose, the Act establishes the Montana Equity Capital Investment Board, a State board consisting of five members appointed by the Governor, and authorizes it to contract with a designated investor group to implement an investment plan approved by the Board.

The designated investor group is to organize, capitalize and administer the Montana Equity Fund, and a sub-fund, the Montana Evergreen Fund, which are private investment funds. The designated investor group is also to contract with investors to provide capital for the Funds.

In its contract with the Board, the designated investor group is to agree that its implementation plan for the Montana Equity Fund will provide that for every $1 invested by the Montana Equity Fund in its aggregate portfolio of fund investments, the designated investor group "shall seek to cause a minimum of $1 of equity capital or near-equity capital to be invested in Montana businesses or projects or primary sector businesses headquartered in the State or having 50% of their gross sales receipts from products principally produced in the State or services provided from a Montana location. A "Montana business or project" means an entity with at least 50% of its employees or assets located in Montana.

To encourage private individuals and entities to invest in the Funds, the Act authorizes the designated investor group to contract with investors for a scheduled return of capital and a rate of return on capital which is guaranteed by certificates to be issued by the Board. The guaranteed return and rate of return are subject to approval by the Board and further circumscribed by a maximum rate of return.

At the time of the investment, the Board is to issue a Certificate to the investor, which can be redeemed for tax credits. The Certificate is transferable and the Board is to establish, with the Department of Revenue, a system of registration for the tax credits. If the actual return or rate of return does not meet the scheduled return and rate of return in the contract, the holder is entitled to redeem the Certificate to reflect the difference in value as a tax credit against individual income taxes, corporation license taxes, or insurance premiums taxes.

The amount of tax credits is limited by the Act to $60 million, a maximum of $12 million to be redeemed in a single year on a first come, first served basis. A Certificate for tax credit may be carried forward for 12 years, but tax credits may not be claimed before July 1, 2010 or after July 1, 2031. The Certificate is binding on the Board and the Department of Revenue once capital is provided to the Funds.

If the return on investment exceeds the scheduled rate of return, fees, reimbursement of expenses and up to 10% of net realized gains (which maybe allocated to the designated investor group and specified investors), the excess amount (defined as "proceeds") is to be reinvested in the Montana Equity Fund until the Fund has invested or reserved for investment $60 million. When this condition has been met, 75% of proceeds would then be distributed to the Montana Evergreen Fund and the remaining 25% to the State general fund until the Montana Evergreen Fund has invested or reserved for investment $60 million. Thereafter, all proceeds would be distributed to the State general fund. Fifty years after organization of the Funds, all investments are to be liquidated and any proceeds deposited in the State general fund.

Further information: http://www.mtcib.com