ANC private equity outlays: native corporations invest in Alaska.

• Author: Slaten, Russ
• Position: ALASKA NATIVE BUSINESS

A look at investing for an Alaska Native Corporation (ANC) is looking at ways to fulfill its mission of serving its shareholders through scholarships and educational foundations, cultural resource programs, cash dividends, and technical training and shareholder hire programs. All of these shareholder benefits require financial support in order to continue operations.

"On the business side of a Native Corporation, were here to create cash and use it to improve the lives of our shareholders," says Gabriel Kompkoff, CEO of Chugach Alaska Corporation. "What were really looking to build is continuing cash flow."

Chugach Alaska Corporation

Kompkoff says to understand Chugach's style of investment would be to make a comparison with other types of investors. In simple terms private equity investors create funds by pooling their money together to create outsized returns on their investment, Kompkoff says.

"The typical investment model in the private market is to find a company, buy it at a great price, find ways to grow it rapidly over a short period of time, and then sell it to harvest most of your gains. That creates a strong incentive for a short-term payout, because the shorter the term the higher the return," Kompkoff says. "Alaska Native Corporations really want to be around forever, so were not really looking to create value that we can harvest on a sale later. We're the long-term investor. We like to think of ourselves as an alternative to private equity, with a much longer term investment horizon."

A couple characteristics most common with ANCs are that they provide cash dividends at a higher rate than most non-Native companies that provide dividends for their shareholders and most have a common social mission embedded in the foundation, Kompkoff says. He believes a diverse base of assets can help Chugach achieve its goal of long-term sustainability with lower risk and that co-investing in certain opportunities can also reduce the risk.

"There's a new era of sophistication that's coming to leadership within Alaska Native Corporations, which is allowing us to explore all sorts of options that have not been exercised in the past," Kompkoff says. "We all have separate shareholder populations but common missions, so that creates a common way of looking at investment. So that gives us a chance to pool our resources and not take all the risk on one investment idea, sharing the risk to leave us with enough capital to make another investment."

Chugach has explored several investment opportunities, and the latest diversified investment comes in the form of Geneva Woods Pharmacy & Healthcare Services, Kompkoff says.

Chugach partnered with two local investors from First Alaskan Capital Partners, Mark Kroloff and JL Properties Chairman John Rubini, to acquire a minority equity position in Geneva Woods in June. Based in Anchorage for more than thirty years, and recently expanded outside of the state, Kompkoff says Geneva Woods plans to use the investment to grow operations into underserved rural markets across the United States.

"We bought a portion of Geneva Woods' stock with a script in the agreement for how we can become a larger owner in the company over time," Kompkoff says.

Until a few years ago Chugach was primarily invested in government contracting. Along with the Geneva Woods investment, Chugach has since diversified its portfolio of businesses and investments in Alaska and beyond. Within the state, Chugach recently acquired a majority stake in Kenai-based All American Oilfield Associates LLC and its wholly-owned subsidiary All American Oilfield Equipment LLC. All American provides oil and gas services primarily in the Cook Inlet region including drilling, production, construction, consulting, and general management services.

Although Chugach has been in the oil and gas industry through its industry support and spill response company Chugach Alaska Services, Kompkoff says...