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In response to recent reports that North Dakotans want Legacy Fund money invested in their state, North Dakota has already invested a significant portion of the fund in their state, and the results have been excellent. I would like to share.
In early 2021, at the request of North Dakotans, the Legacy Budget Stabilization Fund Advisory Committee, the committee that determines how the Legacy Fund is invested, revised the Fund’s investment strategy. These changes allow state retirement investment offices (RIOs), which are supervised by state investment boards (SIBs), to consider in-state investments in fund portfolios. That same year, state law was amended to specify how much of the legacy fund could be directed to in-state investments.
Currently, the Legacy Fund’s in-state investment program is targeting $700 million in in-state fixed income investments, such as infrastructure, and $600 million in in-state equity investments to support new and expanding businesses. The total goal is $1.3 billion.
On behalf of the Legacy Fund Advisory Committee, I am pleased to report that as of December 31, 2023, this program has achieved 30% of its goal. More than $395 million of his legacy fund assets are invested in North Dakota through the Bank of North Dakota (BND) and the North Dakota Growth Fund (NDGF).
This level of investment in the state compares favorably with other regional states with similar economic and population sizes to ours, implementing programs funded by energy tax revenues. As of June 2023, Alaska has invested $155.8 million in programs with a cap of $200 million, and Montana has invested $184.9 million in programs with a cap of $284 million.
North Dakota’s total in-state investment includes loans at below-prime interest rates to attract and retain investment-grade companies, including a $150 million loan that helped close the sale of Coal Creek Station This includes more than $258 million for the BND’s MATCH program, which provides to Bismarck-based Rainbow Energy Center.
The Legacy Fund also invested $49 million through the BND’s Infrastructure Revolving Loan Fund to help pay for roads, bridges, water projects and other critical infrastructure. Since this is a revolving loan fund, this investment frees up capital and allows banks to finance more projects.
Finally, and perhaps of most interest to North Dakotans, is the private equity investment in the state’s investment program. NDGF’s administrator, 50 South Capital, recently provided a year-end update showing that $89 million has been put into his four direct co-investments and his five funds. Through this fund, NDGF and its administrators have co-invested more than $136 million of his funds in 14 North Dakota companies.
Investment decisions require time and careful evaluation to ensure the best possible outcome – a positive return for taxpayers. The bottom line is that the Legacy Fund works for North Dakotans to sustain entrepreneurs.
Our state will diversify North Dakota’s economy and create jobs.
The Legacy Fund and Budget Stabilization Advisory Committee develops and submits recommendations for investment of funds to the Legacy Fund and Budget Stabilization Fund to the State Investment Board (SIB). Mr. Klein also serves as a representative on SIB’s Legacy Fund Advisory Committee.
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