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California Initiative Update

California Initiative Update. Objectives. Mission Statement. The California Initiative will invest in traditionally underserved markets primarily, but not exclusively, located in California. The objective is to discover and invest in opportunities that may have been bypassed or

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California Initiative Update

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  1. California Initiative Update

  2. Objectives Mission Statement The California Initiative will invest in traditionally underserved markets primarily, but not exclusively, located in California. The objective is to discover and invest in opportunities that may have been bypassed or not reviewed by other sources of investment capital. • To earn attractive risk-adjusted returns • As an ancillary benefit, to have a meaningful impact on the economic infrastructure of California Underserved Markets

  3. Underserved Market Opportunity Underserved markets are less efficient and have the potential to provide superior investment performance Investment Opportunity • Companies located in areas where access to institutional equity capital is limited • Companies that employ workers who reside in economically disadvantaged areas • Companies with female and/or minority management

  4. Bank of America Fund-of-Funds GROWTH/ EXPANSION CORPORATE / BUYOUT MIDDLE MARKET SEED VENTURE • Yucaipa Corporate Initiatives Fund • Green Equity Investors • Nogales Investors • Opportunity Capital • Provender Capital • Pacific Community Ventures • American River Ventures • DFJ Frontier California Initiative Partners • Garage Entrepreneurs Fund Fund Fund Fund Fund Fund Fund Fund Fund

  5. History & Milestones

  6. California Initiative Performance Investment returns to date are less meaningful due to the young age of the Program (i.e. the J-Curve Effect that affects all private equity fund investments)

  7. Ancillary Benefits Assessment

  8. Underserved Market Benchmarks • Companies located in areas where access to institutional equity capital is limited: • Companies located outside the top 100 postal codes for receiving venture capital investment. (These top 100 postal codes received 30% of venture capital investment dollars between 2000 and 2005.) • Companies that employ workers who reside in economically disadvantaged areas: • Companies where at least 25% of California employees live in a zip code designated economically disadvantaged. • Companies with female and/or minority management: • Companies where at least one officer (e.g. CEO, COO, CFO, CIO) is female or ethnic/racial minority.

  9. Strong Presence in California • Of 68 companies1: • 48 are headquartered in California • 51 employ a significant proportion of their workforce in California • 37 have been in the portfolio for one year or more • Since investment, these companies have created nearly 2,500 jobs, including nearly 600 in California • CA Initiative companies employ over 5,000 Californians, including approximately 2,000 who live in economically disadvantaged areas of the state • Over 170 distribution, retail and other facilities located across California 1 Active California Initiative companies (as reported in the Initial Assessment Report)

  10. Location 75% of California Initiative Companies are Headquartered or Have a Significant Presence in California

  11. Comparison to Benchmarks • Of 68 companies, 65 are directly impacting underserved markets • Of the 48 companies headquartered in California, 45 are directly impacting underserved markets • Many companies reach underserved markets in multiple ways

  12. Comparison to Benchmarks Of the 68 Companies: • 51 companies (75%) are headquartered in areas of US where access to institutional equity is limited; 35 of these are in California. • 39 companies (57%) have at least one female or minority owner or officer (e.g. CEO, CFO, COO, CIO). • 32 companies (47%) have a workforce where at least 25% of California employees live in disadvantaged areas.

  13. Banc of America Capital Access Funds • Invested in 8 private equity partnerships, 2 others approved • All 10 partnerships contribute to meeting at least one California Initiative objective: • 7 focus on ethnic minority opportunities • 5 focus on employing workers from disadvantaged areas • 2 improving access to capital, capitalizing financial institutions that serve low income/minority communities • 8 have at least one female or minority partner • 8 have offices in California

  14. California Initiative Summary • Performance is improving • Climbing out of the J-Curve • Real value being created in the portfolio • Still fairly early in Program’s life (limited liquidity to date) • Partners continue to find attractive opportunities in CA • The analysis and reporting of financial results and ancillary benefits of the California Initiative are greatly enhanced • Staff will provide the Investment Committee with regular updates on financial and non-financial highlights of the Program • Ancillary benefits assessment report to be completed annually

  15. California Initiative: Case Study

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