Rewarding Returns

Jimmy McCarthy

The Post-Journal

Jul 29, 2017

New York’s chief fiscal officer visited Southern Tier Brewery on Friday to discuss how the investment of state pension funds is assisting the local company and economy.

Thomas P. DiNapoli toured Southern Tier Brewery’s Lakewood facility alongside state officials, including state. Sen Cathy Young, R-Olean, to see firsthand the production of craft beverages. DiNapoli said he was impressed to witness the facility and the sophistication of the operation.

DiNapoli oversees the state Common Retirement Fund’s In-State Private Equity Program, which targets investment of pension funds into New York companies. The program invested $7.6 million in Artisanal Brewing Ventures, the holding company for Southern Tier Brewery, through the state Common Retirement Fund. DiNapoli said the success seen from Southern Tier Brewery is what the comptroller’s office hopes for when money is invested into enterprises in the state.

New York State Comptroller Thomas DiNapoli and state Sen. Cathy Young tour Southern Tier Brewery on Friday. Matt Dunn, director of brewing and quality, provided the tour of the facility.

The state pension fund partners with private equity managers who seek to invest in New York-based companies that need capital for growth or to refinance ownership. The program is designed to provide investment returns consistent with the risk of private equity while also expanding the availability of capital for New York businesses.

“Through our partnership, we’ve invested in Southern Tier Brewery and it’s very clear that (they’ve) put the money to good use,” DiNapoli said.

The state program was underway in 2007 when DiNapoli entered as comptroller. He said the program was being used in modest fashion, and colleagues in Albany began to ask if there was a better way to invest money in the state. DiNapoli said making money for the pension fund is the first goal, and it has. But through investments in local companies, DiNapoli said it benefits the pension fund and helps entrepreneurs obtain the capital they need to start a business or relocate.

“We doubled our efforts to dedicate money through this program, and it’s really part of the double bottom line strategy on investment where we make money for the fund and do good things by helping the economy,” he said.

Phin DeMink founded Southern Tier Brewery in 2003 with his wife, Sara, and father-in-law, Skip. The company started with three employees and grew to 150. In 2014, they created a new company in Artisanal Brewing Ventures, which DeMink said was the first step to evolve the company. DeMink said capital from the state program assisted them in the acquisition of Victory Brewing Company out of Pennsylvania in 2016.

“That really helped us become more competitive and it took us from where we were ranked 33rd in the marketplace for craft breweries to 13th,” he said. “Part of that investment really helped us grow our business and develop a new platform and ensure the longevity of our business.”

Young issued her thanks for the investment in the local economy. She said it shows what can happen when there are partnerships in place.

“I like the fact too that it’s helping the pension fund, so it’s all great news,” she said. “I’m so proud of my district because of companies such as this. They spent the blood, sweat and tears to grow this.”

A total of $1.6 billion is allocated to the In-State Private Equity Program, of which DiNapoli said $1 billion has been used. The program has invested in 361 companies across New York state. He said they’ve had an excellent success rate as it’s returned $863 million, or an 11 percent positive return.

DiNapoli said there are nearly 10,000 residents in Chautauqua County who are part of the pension fund. Of those, around 4,500 are retirees and approximately 5,300 are current members who are state, local government or school district employees.

“Here we are putting our money to work, helping a business do great things and growing and securing the retirement benefits for those 10,000 individuals here in Chautauqua County,” he said.

As of March 31, the overall pension fund was valued at $192 billion — the third largest public pension fund in the U.S.