21 Jul Potawatomis to ramp up their investing
Milwaukee, Wis. – For future generations of Native Americans in Wisconsin, the path to financial security could lead through some high-tech corridors.
An effort to diversify Potawatomi tribe casino funds is adopting a more aggressive investment strategy, one that has contributed to both the nation’s technology industry and the state economy.
After investing in two Midwestern companies—an ethanol plant and an IT firm—the Forest County Potawatomi Community has planted its third stake in tech-based enterprise early this week with an initial $1 million financing arrangement with California-based Brendan Technologies, Inc. Owned by Omni U.S.A., Inc., Brendan produces analytical software for life-science companies.
Brendan will use the gaming funds to develop its product, StatLIA, used for immunoassay workflow and analysis, and to incorporate a redesigned user interface in its forthcoming iteration.
According to Brendan, the new release will meet the demands of customers in biopharmaceutical, research, veterinarian, and agricultural industries for an enterprise-wide solution. In return, the Potawatomi Business Development Corp., the economic development and income diversification arm of FCPC, will be able to convert and purchase Brendan (Omni) stock.
“It’s an incredible investment opportunity based on their current client base, and their unique niche product,” said Carol Leese, CEO of PBDC.
Besides Brendan’s anticipated profitability, the investment allows the Potawatomis to exploit a synergistic advantage. Brendan’s help desk and programming needs will be served by a recent PBDC acquisition, One Prospect Technologies, an IT service provider firm from Crandon, Wis.
“It’s a two-tiered approach to the investment,” Leese said.
Potawatomi in high tech
In 2004, PBDC focused on preserving capital by avoiding risk investments and limiting its capital exposure in any new investment to less than 15 percent of its overall financial asset base.
Through its subsidiary company, Potawatomi Capital Company, PBDC invested in income-producing assets, including hospitality, commercial real estate, housing, and manufacturing.
A notable example is PBDC’s investment in Four Fires, LLC, an economic partnership of four Native American tribal groups, including FCPC, to build a $43 million, 233-room Residence Inn Hotel by Marriott Capitol in Washington, D.C. It is managed by Bethesda-based Hospitality Partners and built by Donohoe Companies, Inc.
“The goal was to create an investment portfolio that was conservative, to gain credibility with the tribe for diversifying the casino fund,” Leese said.
By the end of 2004, total investments appreciated by over $80,000, and credibility was being established. Entering 2005 with more than double its asset valuation at the beginning of 2004, PBDC made its first investment in high tech.
The corporation invested in a 110 million gallon ethanol plant in Fort Dodge, Iowa, which is run by the second largest ethanol producer in the U.S., VeraSun Energy Corp. The investment was made through Bluestem Capital Company, a private equity investment firm from Sioux Falls, S.D.
This year, the strategy to leverage the current $21 million asset base became more aggressive, highlighted by buying full companies and investing in high-tech firms like Brendan.
This phase, Leese said, “is the acquisition and business-development model – ramping up the corporation.”
Investing in Wisconsin
Investing in Wisconsin is “absolutely” a priority for PBDC, Leese said.
In addition to moving One Prospect offices to Milwaukee within the next two months, PBDC will open additional offices and hire employees in the city for a company they acquired in May.
“We will definitely provide economy for the state of Wisconsin,” Leese explained.
The Potawatomi Design Group, formerly of Architects and Engineers of Norman, Okla., will open an office in Milwaukee in the fourth quarter of this year.
At this point, the PBDC has no plans to invest in an ethanol plant in Wisconsin. The state has five ethanol plants that are expected to produce a combined 300 million gallons of blended fuel this year, with two more coming on line by year’s end. They are attracting interest from outside investors, but thus far Wisconsin plant owners have shown little inclination to sell their operations.
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