A. In addition to the investments required by Subsections F and G of this section, no more than eleven percent of the market value of the severance tax permanent fund may be invested in New Mexico private equity funds or New Mexico businesses under this section.
B. In making investments pursuant to Subsection A 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.
C. The state investment officer shall make investments pursuant to Subsection A of this section only upon approval of the council and within guidelines and policies established by the council.
D. As used in this section:
(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 entity that makes, manages or sources potential investments in New Mexico businesses and that:
(a) has as its primary business activity the investment of funds in return for equity in or debt of businesses for the purpose of providing capital for start-up, expansion, product or market development, recapitalization or similar business purposes;
(b) holds out the prospects for capital appreciation from such investments;
(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 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 pueblos with at least five million dollars ($5,000,000) in overall investment assets.
E. The state investment officer is authorized to make investments in New Mexico businesses to create new job opportunities and to support new, emerging or expanding businesses in a manner consistent with the constitution of New Mexico if:
(1) the investments are made:
(a) in conjunction with cooperative investment agreements with parties that have demonstrated abilities and relationships in making investments in new, emerging or expanding businesses;
(b) in a New Mexico aerospace business that has received an award from the United States government or one of its agencies or instrumentalities: 1) in an amount, not less than one hundred million dollars ($100,000,000), that is equal to at least ten times the investment from the severance tax permanent fund; and 2) for the purpose of stimulating commercial enterprises; or
(c) in a New Mexico business that: 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, telecommunications, computer and information science, environmental science, biomedical science, life science, physical science, materials science or nanoscience, using research developed in whole or in part by a state institution of higher education or a prime contractor designated as a national laboratory by an act of congress that is operating a facility in the state, or an affiliated entity; and 2) has an agreement to operate the business on state lands;
(2) an investment in any one business does not exceed ten percent of the amount available for investment pursuant to this section; and
(3) the investments represent no more than fifty-one percent of the total investment capital in a business; provided, however, that nothing in this subsection prohibits the ownership of more than fifty-one percent of the total investment capital in a New Mexico business if the additional ownership interest:
(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;
(b) is necessary to protect the investment; and
(c) does not require an additional investment of the severance tax permanent fund.
F. In addition to the investments required by Subsections A and G of this section, the state investment officer shall make a commitment to the small business investment corporation pursuant to the Small Business Investment Act [Chapter 58, Article 29 NMSA 1978] to invest two percent of the market value of the severance tax permanent fund to create new job opportunities by providing capital for land, buildings or infrastructure for facilities to support new or expanding businesses and to otherwise make investments to create new job opportunities to support new or expanding businesses in a manner consistent with the constitution of New Mexico. On July 1 of each year, the state investment officer shall determine whether the invested capital in the small business investment corporation is less than two percent of the market value of the severance tax permanent fund. 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 is equal to two percent of the market value of the fund.
G. In addition to the investments provided for in Subsections A and F of this section, the state investment officer shall make a commitment to the New Mexico finance authority to invest the lesser of four hundred million dollars ($400,000,000) or ten percent of the market value of the severance tax permanent fund in investments made pursuant to the Small Business Recovery Act of 2020; provided that:
(1) investments made pursuant to and in compliance with the Small Business Recovery Act of 2020 shall be deemed to be in compliance with the prudent investor rule set forth in the Uniform Prudent Investor Act [45-7-601 to 45-7-612 NMSA 1978]; and
(2) the New Mexico finance authority shall not be held liable for investments made pursuant to this subsection that do not provide a return on investment that is comparable to other differential rate investments made pursuant to the Severance Tax Bonding Act.
H. The state investment officer shall report semiannually on the investments made pursuant to this section. 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 committee. Each report shall provide the amounts invested in each New Mexico private equity fund, as well as information about the objectives of the funds, the companies in which each private equity fund is invested and how each private equity investment enhances the economic development objectives of the state. Each report also shall provide the amounts invested in each New Mexico business.
History: 1978 Comp., § 7-27-5.15, enacted by Laws 1990, ch. 126, § 5; 1997, ch. 70, § 1; 2000, ch. 76, § 1; 2000, ch. 97, § 2; 2001, ch. 238, § 1; 2001, ch. 252, § 10; 2003, ch. 399, § 2; 2003, ch. 401, § 1; 2003, ch. 406, § 1; 2004, ch. 57, § 1; 2005, ch. 63, § 1; 2006, ch. 10, § 1; 2007, ch. 355, § 1; 2007, ch. 359, § 1; 2007, ch. 360, § 1; 2013, ch. 181, § 1; 2015, ch. 95, § 9; 2016, ch. 48, § 2; 2019, ch. 46, § 1; 2020, ch. 75, § 1; 2020 (1st S.S.), ch. 6, § 10.
ANNOTATIONSRepeals. — Laws 2020 (1st S.S.), ch. 6, § 12, effective July 7, 2020, repealed Laws 2020, ch. 75, § 1, which would have become effective July 1, 2020. For provisions of Laws 2020, ch. 75, § 1, see the 2020 Session Laws on NMOneSource.com.
Cross references. — For Section 6 of the federal Securities Act of 1933, see 15 U.S.C. § 77f.
The 2020 (1st S.S.) amendment, effective July 7, 2020, allowed for an increase in the investment of severance tax permanent fund in New Mexico private equity funds or New Mexico businesses, and required the state investment officer to invest a certain amount of the severance tax permanent fund in loans made pursuant to the Small Business Recovery Act of 2020; in Subsection A, added "In addition to the investments required by Subsections F and G of this section", and after "no more than", deleted "nine" and added "eleven"; in Subsection F, added "In addition to the investments required by Subsections A and G of this section"; and added a new Subsection G and redesignated the succeeding subsection accordingly.
The 2019 amendment, effective June 14, 2019, increased the amount of Severance Tax Permanent Fund capital dedicated for investment through the Small Business Investment Corporation pursuant to the Small Business Investment Act from one percent of the severance tax permanent fund to two percent; and in Subsection F, substituted "two" for "one" throughout the subsection.
The 2016 amendment, effective May 18, 2016, amended the definition of "private equity fund"; in the catchline, added "New Mexico"; in Subsection D, Paragraph (2), after "equity fund means", deleted "a limited partnership, limited liability company or corporation organized and operating in the United States and maintaining an office staffed by a full-time investment officer in New Mexico" and added "an entity that makes, manages or sources potential investments in New Mexico businesses and", in Subparagraph D(2)(c), after "business plans", deleted "and who has established permanent residency in the state", in Subparagraph D(2)(d), after each occurrence of "business in", deleted "the state" and added "New Mexico"; in Subsection G, after "semiannually on the", deleted "New Mexico private equity", after "in which each", added "private equity", after "invested and how each", added "private equity", and after "Each report", added "also".
The 2015 amendment, effective June 19, 2015, eliminated the private equity investment advisory committee; and in Subsection C, after "approval of the council", deleted "upon review of the recommendation of the private equity investment advisory committee".
The 2013 amendment, effective June 14, 2013, permitted the state investment council to invest in New Mexico businesses that perform technology transfer, research and development, research commercialization, manufacturing, training, marketing or public relations in fields of science and technology on state land; and added Subparagraph (c) of Paragraph (1) of Subsection E.
The 2007 amendment, effective June 15, 2007, increased investments of the severance tax permanent fund in private equity funds from six to nine percent.
The 2006 amendment, effective May 17, 2006, added Subparagraph (b) of Paragraph (1) of Subsection E to authorize the state investment officer to make investments in New Mexico aerospace businesses.
The 2005 amendment, effective June 17, 2005, increased the percentage of the severance tax permanent fund invested in the small business investment corporation to three-fourths percent of the market value of the fund.
The 2004 amendment, effective May 19, 2004, amended Subsection F to change "one-fourth" to "one-half" percent of the market value of the severance tax fund in three places.
The 2003 amendment, effective June 20, 2003, deleted "small" preceding "business" in the section heading; substituted "six percent" for "three percent" near the beginning of Subsection A; deleted former Subsection B, relating to limitations on investments in private equity funds; and added Subsections E and G.