New $130 million fund gets boost from state, Dow and Small Business Administration

Posted on July 27, 2011

A $130 million fund that will invest in small and medium-sized growing companies is being capitalized by the state, Dow Chemical Co. and theU.S. Small Business Administration.

The new InvestMichigan! Mezzanine Fund will provide debt and equity funding to companies seeking capital for ownership transitions, business expansions, buyouts, recapitalizations and/or refinancings, officials said in a Tuesday conference call with reporters to announce the program.

It will play “a critical role in … the food chain to grow your business,” said Gov. Rick Snyder.

The state is investing $20 million from the state’s retirement system and $15 million from theMichigan Natural Resources Trust Fund, while Midland-based Dow is contributing $15 million. The Small Business Administration will provide an $80 million match through its new $1 billion Start-Up America Impact Investment Small Business Investment Co., or SBIC, nationwide initiative.

Michigan is the first state to benefit from the SBA initiative.

SBA Administrator Karen Mills said the goal of the fund is to “accelerate entrepreneurship, and turn innovation into jobs.”

The new fund, which will be a licensed SBIC, will focus on providing capital to businesses that are headquartered in Michigan, that have a significant presence, or that plan to expand or relocate here.

The mezzanine fund will be managed by Credit Suisse‘s Customized Fund Investment Group and Beringea LLC, which currently co-manage an existing $185 million InvestMichigan! Growth Capital Fund that targets lead and co-investment opportunities in venture capital and small buyout-stage companies.

Kelly Williams, managing director at Credit Suisse, said the fund will target companies in sectors across the state, although many prospects may come from manufacturing.

Williams expects there could eventually be around 20 companies in the fund’s portfolio.

The fund will invest $5 million to $15 million in cash-flow-positive companies that have revenues of more than $20 million.

Williams said the new fund is important to not only help companies grow, but to keep them in Michigan.

Dow Chairman and CEO Andrew Liveris said it’s important for large corporations to support smaller companies and the initiative will enable small and medium-sized companies – some of whom could be Dow vendors, suppliers or customers – “to get to the lifeblood of capital” that they need.

By Amy Lane, Crain’s Detroit