Current and former elected officials say the $200 million program’s secrecy is risky for the state, which now relies on Permanent Fund earnings for most of Alaska state government’s general-purpose revenue.
Stocks are what’s considered “public equity.” An ordinary person can see their value and buy a share from open markets. But public equity investments account forA growing share of the fund, including the new in-state program, is what’s called “private equity.”
Private equity investors will go out and give that company money in exchange for a share of the company. Sometimes, instead of a new company, it’s an established company that’s looking to expand or change operations. It takes time for those home runs to develop — years, sometimes a decade or more — and there’s rarely a quick exit. Losses tend to come in the first few years, causing what Allen and other financial experts call a “J curve.” The value of the total investment drops at first, then rises as successes outweigh the losses., but that kind of investment grew rapidly, making up 4% of the fund by the late 2000s, 11% by 2017, and it’s about 20% now.
To manage the new in-state private equity program, the Permanent Fund has hired Anchorage-based McKinley Capital Management and Barings, a global firm. In the early 2000s and 2010s, neighbors dubbed it “Space Pork Kodiak” for its reliance on government-funded contracts and subsidies. Now, about half of the business at the spaceport comes from small startup companies, and it hasn’t received a direct state subsidy in years.
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