State ponders investing its money in China, India

Posted: Tuesday, August 02, 2005

The state's economic development financing agency is considering funding a venture capital startup that would invest in industrial projects in China, India and other developing Asian countries.

The Alaska Industrial Development and Export Authority's board of directors at their July 25 meeting heard a pitch from representatives from the Industrial Bank of Taiwan and TECO Group, a Taiwanese manufacturer. Under the proposal, AIDEA would join IBT and TECO in starting a $200 million fund called the ATM Private Equity Fund that would have a life of 10 to 15 years and be domiciled in the Cayman Islands.

Up to half of the fund would come from AIDEA, which has assets worth $1.3 billion, according to chairman Mike Barry. The fund would invest in several industries in Asia which Barry declined to specify, saying the details were proprietary.

The venture capital group is still a concept and many questions need to be answered before the board will consider it, Barry said. But, he said, the idea could be a way to increase AIDEA's earnings and diversify its investments.

"It seems to be promising to us," Barry said Monday.

The idea was brought to AIDEA by the Taiwan-Alaska Trade and Investment Council, which was formed by Gov. Frank Murkowski when he signed a memorandum of understanding with Taiwanese officials last fall. Spokeswoman Becky Hultberg said the governor has not been briefed on the proposal.

Bill Noll, Murkowski's new commissioner of Commerce, Community and Economic Development, is familiar with the venture capital idea and said it was intriguing, particularly investing in a rapidly developing China.

"I think the world is looking at China. If you don't have China on your table, you're missing a large piece from your economy," he said.

AIDEA was created to help grow Alaskan industries and jobs by loaning money to businesses in the state and through its development program, which finances public use or tourism infrastructure and facilities.

That the agency would consider investing a large chunk of cash in Asia and not Alaska strikes Rep. Mike Hawker, R-Anchorage, as a big departure and a proposal that would receive close legislative scrutiny if it moves forward.

"I'm not sure I want them taking 100 million or 200 million of Alaska dollars and investing them in China," Hawker said. "I think it's laudable they want to go out and make money, but that's not in their mission."

Barry said there is no timeline to respond to the proposal and AIDEA staff is researching whether the fund would be an appropriate investment.

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