NMSA 1978, § 7-27-5.15 — 7-27-5.15

New Mexico private equity funds and New Mexico
business investments.

# 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 6, Article 32 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 five hundred million dollars ($500,000,000) of the severance tax
permanent fund in investments made pursuant to the Small Business Recovery and
Stimulus Act; provided that:
(1) investments made pursuant to and in compliance with the Small Business
Recovery and Stimulus Act 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.