NAC355.310. Fund of Funds Manager: Selection; duties; fee structure.

     1. In accordance with chapter 333 of NRS and chapter 333 of NAC, the officers of the Corporation shall prepare a request for proposals for the selection of the Fund of Funds Manager and coordinate any activities necessary to present to the Board the proposals submitted in response to the request for proposals. The request for proposals must require that a person submitting a proposal disclose:

     (a) Any conflict of interest;

     (b) All criminal convictions of the person and the principal personnel of the person;

     (c) Any investigations of the person and the principal personnel of the person by the Internal Revenue Service, the Securities and Exchange Commission and any other state or federal agency charged by law with investigating violations of laws relating to taxation or securities; and

     (d) All litigation involving the person and the principal personnel of the person relating to the financial affairs of the person or the principal personnel.

     2. The Board shall evaluate proposals submitted in response to the request for proposals prepared pursuant to subsection 1 and select the Fund of Funds Manager based on the criteria established by the Board. The contract between the Corporation and the Fund of Funds Manager selected by the Board must contain termination and performance clauses which authorize the Board to terminate the contract based on legal, performance and qualitative criteria and any other criteria agreed to by the Board and the Fund of Funds Manager.

     3. The Fund of Funds Manager shall:

     (a) Establish an office within this State which, at a minimum, is staffed by a part-time employee who actively seeks opportunities to invest in businesses located in this State.

     (b) Establish an investment plan for the Corporation which provides for an asset allocation that:

          (1) Invests not more than $7.5 million of the Corporation’s capital in a single business and invests not more than $10 million or 20 percent of the capital invested by the Corporation in a single private equity fund;

          (2) Establishes a diversified portfolio of private equity investments that may include, without limitation, venture capital, growth capital, buyout investments, mezzanine financing, distressed debt or secondary investments in private equity; and

          (3) Promotes investments in qualified businesses that pursue the primary goal of providing greater investment returns for the State Permanent School Fund and the secondary goal of promoting economic development and employment in this State.

     (c) Select private equity funds in which to invest the Corporation’s money and co-investments and direct investments for the Corporation in accordance with the guidelines, policies and procedures established by the Board.

     (d) On behalf of the Corporation, negotiate and execute partnership agreements with private equity funds in which the money of the Corporation will be invested and to effectuate co-investments and direct investments for the Corporation.

     (e) Manage daily activities associated with the investments of the Corporation.

     (f) Develop relationships with important constituencies in this State, including, without limitation, governments, educational institutions, corporations, entrepreneurs, and private equity and venture capital organizations, and foster cooperation among these institutions and organizations.

     (g) Work with venture capital and entrepreneurial organizations to organize regional forums and conferences.

     (h) In accordance with industry standards for due diligence with respect to private equity funds, perform regular due diligence of private equity funds in which the Corporation is invested.

     (i) Provide an annual report to the Board concerning the performance and activities of each private equity fund in which the Corporation is invested and each co-investment and direct investment of the Corporation.

     (j) Review the performance of all investments made by the Corporation pursuant to NRS 355.250 to 355.285, inclusive, and NAC 355.200 to 355.340, inclusive.

     (k) Execute investment decisions based on the following criteria:

          (1) Primarily, the probability that a business will succeed and the expected investment return; and

          (2) Secondarily, the diversification of the economic base of this State and the generation and retention of jobs and investment in this State.

     (l) Ensure that 100 percent of the venture capital co-investments and direct investments of the Corporation are made in businesses that meet the criteria set forth in subsection 6 of NRS 355.285.

     (m) Ensure that a business relocating to this State and receiving a venture capital co-investment or direct investment is required:

          (1) To maintain a presence in this State, as evidenced by the criteria set forth in subsection 6 of NRS 355.285, for a minimum period; and

          (2) To pay back any investment made by the Corporation if the business fails to maintain such a presence for the minimum period.

     (n) Ensure that at least 70 percent of the private equity funding provided by the Corporation, after the payment of fees to investment managers, is provided to businesses that meet the criteria set forth in subsection 2 of NRS 355.280.

     (o) Prepare a draft of the annual report required by paragraph (d) of subsection 7 of NRS 355.270 and submit the draft to the officers of the Corporation for review. The officers of the Corporation shall review the draft of the report and submit it to the Board for approval. The report must provide:

          (1) An accounting of all money received and expended by the Corporation, including, without limitation, any grants, gifts and donations received by the Corporation; and

          (2) The name and a brief description of all funds receiving an investment from the Corporation.

     (p) Perform any other duties established by the contract between the Corporation and the Fund of Funds Manager.

     4. The fee structure for the Fund of Funds Manager may consist of only a management fee and a performance fee. The management fee may not exceed 1 percent of the committed capital. The performance fee may not exceed 10 percent of the profits generated by the Corporation’s investments.

     (Added to NAC by St. Treasurer by R128-11, eff. 2-20-2013)