Smart investments

Montana missing out on opportunities for private equity

Private equity is too often Montana's "missed opportunity," an investment expert told a group of Montana Ambassadors during their annual meeting Friday in Whitefish.

In 2003, private equity in the United States created 600,000 new jobs, said Brian O'Keefe, vice president of AA Capital Partners in Chicago. It also created over $212 billion in revenue.

"This is making people money, too," he said. "Where's the downside in that?"

Of the $360 billion venture capitalists have invested in the last 10 years, Montana businesses have received just $90 million, O'Keefe said.

"That has got to change," he said. "It just needs to."

He admitted that Montana has something of a "chicken and egg problem."

Without equity capital, the state can't attract entrepreneurs. Without entrepreneurs, it's difficult to get equity capital.

One of those two has to change, he said. Montana needs to get equity capital.

"Entrepreneurs aren't just going to arrive and hope that the money shows up," he said.

There are plenty of opportunities already in the state that should be attracting equity capital, O'Keefe said.

One of these is the biodiesel refinery in Culbertson.

It's a smart investment, O'Keefe said.

They've been in business over 40 years. Their annual revenue is $5.5 million.

But they need $5 million in capital to really grow, he said.

"If this deal were anywhere but here, it would have been done a year ago," he said.

Another smart investment, O'Keefe said, is the Department of Defense plastics fabricator in Belgrade.

They've been in business for 35 years, he said, and their revenue is $600,000 per year.

They just need $400,000 in capital, he said.

Or what about in Bozeman, O'Keefe asked, where a company has been producing a spray-on foam insulator product for 15 years.

Their annual revenue is $7 million each year, he said.

They need $2.5 million in capital.

The businesses wouldn't have to rely solely on private equity to get that necessary capital, thanks to loans and other opportunities available to entrepreneurs.

"You can leverage the heck out of your equity," O'Keefe said.

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com