New York State Hunts for Private Equity

Statewide Zone Capital Corp. of Albany, N.Y., is raising as much as $181.7 million to invest in 51 low-to-moderate income level regions in New York state.

Fund raising began Aug. 6 and is expected to close in October, said Robert Lazar, president of the New York Business Development Corp., which is managing the fund. Lazar added that the fund can begin investing as soon as it raises $4 million.

The state has reserved $45 million in tax credits for participating partners, awarding income tax credits that will match 25% of the investment. In 1993, the state offered $2.5 million in tax credits in a failed attempt to raise its own fund. The tax credits were never used.

“A concept was developed where we would collect as many tax credits as we could and form a statewide company,” Lazar said. “We would then try to access investors and make loans and equity investments on a statewide basis.”

He said the fund has approached New York-based banks, insurance companies, utilities and large businesses to invest in the fund, which he said will likely close at around $100 million.

First Albany is acting as the fund’s placement agent.

Allocation of the fund will be split, with 80% allocated to debt financing, and the remaining 20% targeted to private equity investments. No more than $500,000 will be committed to any investment entity.

The program is open to all businesses located within the 51 zones, 85% of which are based in urban regions.