Michigan Gov. Jennifer M. Granholm and Michigan Economic Development Corp. President and CEO Greg Main Wednesday announced Michigan Strategic Fund board approval of investments in three venture capital funds and one mezzanine fund through the Michigan 21st Century Investment Fund totaling up to $35.5 million.
Granholm also announced a new renewable energy renaissance zone in Alpena that will result in a $23.5 million biorefinery.
As for the venture fund actions, the state authorized up to $5 million for Arsenal Venture Partners, an early stage venture capital firm focused on the convergence of the defense and commercial markets. The firm, based in Palo Alto, Calif. with an office in Winter Park, Fla., will establish an office in Michigan.
Up to $10 million was authorized for Cleveland-based Early Stage Partners L.P., a provider of early stage venture capital to companies in the Midwest. The firm plans to fund the commercialization and development of research taking place in educational, scientific and medical institutions. The firm will open an office in Ann Arbor.
An investment of up to $10 million was authorized for Triathlon Medical Ventures, a Cincinnati-based venture capital firm with a focus on life sciences companies. The firm, which also has offices in Indianapolis, St. Louis, Mo. and Louisville, Ky., has hired a Michigan-based full-time partner.
Up to $14.5 million was authorized for Detroit-based Peninsula Capital Partners, Michigan’s largest mezzanine fund manager. The firm targets non-conventional transactions such as growth capital, strategic acquisitions, leveraged dividends, shareholder buybacks and other special situations.
“Building and sustaining the strong capital markets is critical for businesses at all stages of development to grow and prosper,” said Main, who is also chair of the MSF board. “We are executing an aggressive strategy to do just that here in Michigan.”
The MSF has authorized up to $109 million of investments in venture capital, mezzanine, and private equity funds, as well as co-investments in individual companies alongside these funds through the 21st Century Investment Fund.
“We believe that these four managers are a strong addition to the Michigan 21st Century Investment Fund,” said Kelly Williams, a Managing Director and Co-Head of Credit Suisse’s Customized Fund Investment Group, the Michigan 21st CIF fund manager. “Each of the four managers has taken major steps to show that they are committed to investing capital in Michigan based companies. We are extremely happy with the portfolio of fund managers that has been built over the past three years for the Michigan 21st Century Investment Fund.”
The 21st Century Investment Fund seeks to strengthen and diversify Michigan’s economic base by fostering the creation and growth of new jobs, new businesses, and new industries within the state through investments in private equity, venture capital mezzanine funds and co-investments in individual companies alongside these funds. The Michigan Strategic Fund contracts with Credit Suisse to develop and administer investment programs under the Michigan 21st Century Investment Fund. More information is available at www.michigan21stcenturyinvestmentfund.com.
Granholm also announced state approval of Michigan’s newest Renewable Energy Renaissance Zone, a 28.6-acre site in the city of Alpena. The zone will be home to the Alpena Prototype Biorefinery, a partnership of Atlanta-based American Process Inc. and San Antonio-based Valero Energy Corp., a Fortune 500 company and the largest refiner in North America.
“We are continuing to diversify Michigan’s economy through the development of green energy technologies,” Granholm said. “The cutting-edge technology being developed in Alpena will help create new jobs and put us another step closer to becoming the alternative energy capital of the world.”
The designation allows a company operating within the zone to operate free of virtually all state and local taxes for 15 years effective Jan. 1, 2010. The pilot scale biorefinery, expected to create 10 new jobs, has potential for replication across the state in other biorefineries, pulp and paper mills, and food and agricultural processing plants.
The Alpena Prototype Biorefinery alternative energy partnership was named one of the state’s six Centers of Energy Excellence in November 2008, and will receive $4 million from the program to establish the new biorefinery adjacent to the Decorative Panels International hardwood plant in Alpena to convert waste materials into cellulosic ethanol and sodium acetate (a de-icer).
Last December, Michigan’s Renaissance Zone Act was amended to expand to 15 from 10 the number of tax-free zones statewide to grow renewable energy companies. The Michigan Strategic Fund Board today approved the city of Alpena’s request for the Renewable Energy Zone. The final decision on the new designation is expected soon from the State Administrative Board. If approved, APB will be the state’s third RERZ, preceded by Biofuel Industries Group in Adrian, and Heat Transfer International, Kentwood, a company manufacturing custom biomass gasification electrical generation systems.
“These projects show the potential of Michigan to grow alternative energy capacity,” Main said. “Developing and harnessing green energy sources in Michigan is critical to securing a strong economic future.”
“This project will allow manufacturers to reduce costs and make them more sustainable and economically viable,” said Lee Shirey, president, Target Alpena Development Corp. “With other new alterative energy projects in Northeast Michigan, including a new windmill, a cellulosic ethanol plant and gasification processes at local landfills, we are excited for the opportunity to join with APB as we work to diversify our local economy.”
Michigan’s Renaissance Zone program is administered by the Michigan Economic Development Corp. More at www.TheMEDC.org.
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